Nigerian Treasury bill yields fell to their lowest levels this year at the first auction after the central bank’s surprise 350-basis-point rate cut. Investors crowded into the longest tenor to lock in returns before yields fall further.
The Central Bank of Nigeria, on behalf of the Debt Management Office, sold N447.07 billion of 364-day bills at a stop rate of 15.89% on Wednesday.
That is down from 16.62% at the previous auction and the lowest since October.
Bids for the one-year bill reached N4.09 trillion against N400 billion on offer. That is about 9.2 times the amount sold, the strongest demand since June 2025, according to data compiled by Bloomberg.
The CBN sold about N497.6 billion across all three tenors, close to the N500 billion target. It did so by raising the one-year offer to N400 billion from the N300 billion first announced and lending more at the long end to make up for weak demand for short bills.
The pattern shows investors expect more easing.
Money-market rates had already dropped from about 20% to 17%–18% before the decision, and system liquidity stood at N6.90 trillion on September 21.
A Cut the CBN Calls a “Recalibration”
The Monetary Policy Committee lowered the benchmark rate to 23% from 26.5% on September 22.
It was the committee’s 307th meeting, and the cut was the biggest since at least 2007 and the largest on record.
The committee also narrowed the corridor around the benchmark to +50/−300 basis points from +50/−450. That lowered the lending facility rate to 23.5% from 27% and the deposit facility rate, the effective floor, to 20% from 22%. Cash reserve requirements were kept at 45% for commercial banks.
Several analysts said the move closes a gap more than it starts cheap money, since Treasury bill and OMO yields were already trading below 20%.
Standard Chartered’s Razia Khan said policy would stay restrictive but saw room for more easing next year after the elections.
What It Means for Investors
At 15.89%, the one-year stop rate now sits about 50 basis points above August inflation. True yields are about 18.9% because bills are sold at a discount, so the pricing is still attractive but moving toward the inflation rate.
Local-currency bond yields have fallen too. The average sovereign yield dropped 3.2 percentage points to 15.9% on Wednesday, according to Bloomberg, the steepest fall since December 2024.
The risks are fuel-price pressure after the harvest season, Nigeria’s reliance on foreign portfolio inflows, and the chance of Federal Reserve tightening. Any of these could slow further cuts. The next MPC meeting is on November 24.
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