Investor demand for high-yield, long-term T-Bills, OMO instruments soars

Investor appetite for high-yield, long-term Treasury Bills (T-Bills) and Open Market Operation (OMO) instruments has surged, signaling renewed confidence in Nigeria’s fixed income market. The shift reflects investors’ search for stable, low-risk returns amid ongoing economic reforms and elevated interest rates.

At the OMO auction held on Wednesday, the Central Bank of Nigeria (CBN) offered N600 billion worth of bills split between 272-day and 363-day maturities. However, investor interest was overwhelmingly skewed toward the longer-tenor instrument. Out of a total subscription of N2.17 trillion, the 363-day bill alone attracted a massive N2.13 trillion in bids—more than three times the amount on offer. The 272-day paper received no allotment, while the 363-day bill saw N1.25 trillion in sales, clearing at a stop rate of 21.99 percent. The bid-to-offer ratio stood at 1.74x, underscoring sustained investor demand for longer-dated, high-yield instruments.

In a separate Treasury Bills auction on the same day, the CBN offered N250 billion across standard maturities. The auction attracted total subscriptions of N1.33 trillion, reflecting robust market demand. Once again, the bulk of investor interest focused on the 364-day bill, which pulled in N1.18 trillion in subscriptions. The CBN allotted N126.31 billion on this tenor, resulting in a strong bid-to-cover ratio of 6.59x—down slightly from 7.61x at the previous auction but still indicating significant demand.

Market analysts attribute this surge in interest to investors seeking to lock in attractive yields amid expectations that rates could stabilize or moderate in the near term. The preference for longer-dated instruments also suggests a growing level of confidence in Nigeria’s monetary policy direction and macroeconomic reforms.

As the CBN continues to manage liquidity through OMO and T-Bill auctions, the strength of demand—particularly for longer maturities—highlights the evolving strategies of institutional investors in Nigeria’s debt market.

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