Nigeria’s fixed-income market displayed strong investor enthusiasm at the Nigerian Treasury Bills (NTB) auction conducted by the Debt Management Office (DMO) on October 8, raising approximately ₦345.10 billion across three maturities despite a notable decline in stop rates.
The auction, which offered ₦570.00 billion in bills, attracted subscriptions totalling roughly ₦1.06 trillion, reflecting a bid-to-cover ratio of 1.87. The overwhelming demand, particularly for the one-year tenor, highlights sustained investor appetite for government securities amid evolving macroeconomic conditions and shifting monetary policies.
According to the DMO, the 91-day bill, maturing on January 8, 2026, saw bids of ₦25.97 billion against an offer of ₦100.00 billion, with ₦25.37 billion allotted at a stop rate of 15.00 per cent, unchanged from the prior auction. The 182-day instrument, due April 9, 2026, drew ₦52.12 billion in bids against a ₦120.00 billion offer, with ₦41.33 billion allotted at 15.25 per cent, down slightly by 0.05 percentage points.
The 364-day paper stole the spotlight, attracting ₦986.33 billion in subscriptions against a ₦350.00 billion offer. The DMO allotted ₦503.30 billion at a stop rate of 15.77 per cent, a significant drop of 1.01 percentage points from the previous rate of 16.78 per cent.
The softening of yields, particularly on longer-dated instruments (with the 10-year FGN bond yield steady at 16.22 per cent in early October 2025), signals robust system liquidity and sustained demand from institutional investors. Banks, pension funds, and fund managers are increasingly positioning themselves into longer-dated securities to secure rates amid expectations of further yield moderation.
This yield compression aligns with market anticipation that the Central Bank of Nigeria (CBN) will maintain a measured approach following its recent 50 basis point cut to the Monetary Policy Rate (MPR) to 27 per cent in September 2025, down from 27.5 per cent in July. Earlier rate hikes in 2024 aimed to stabilise the naira and curb inflation.
Despite lower yields, real returns on NTBs remain negative, with headline inflation at 20.12 per cent in August 2025, according to the National Bureau of Statistics, down from 21.88 per cent in July and a peak above 34 per cent in late 2024. Analysts project inflation could ease to around 17 per cent by October 2025, supported by base effects and naira stability. This environment underscores investors’ focus on liquidity, safety, and nominal returns over inflation-adjusted yields.
The auction results also reflect short-term confidence in sovereign instruments amid ongoing foreign exchange pressures and cautious sentiment in the equities market. For the government, lower stop rates—evident in recent auctions, including over ₦1 trillion in subscriptions for the 364-day tenor in May 2025 and rates dipping to around 19 per cent mid-year—signal reduced borrowing costs, bolstering fiscal management in Q4 2025.
Outlook
The DMO’s selective allotment strategy, with just over 60 per cent of the offer size allotted, underscores prudent liquidity management and aligns with efforts to balance cost and risk in Nigeria’s public debt portfolio. High subscription levels, particularly for the 364-day tenor, provide the government with flexibility in near-term funding without pushing yields higher.
Market watchers will closely monitor upcoming CBN and DMO actions, as well as September inflation data expected mid-October, for further signals on Nigeria’s monetary and fiscal trajectory.
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