DMO Raises N709.6 Bn As Yield On 1-Year T-Bill Jumps To 17.5 Percent

By Enam Obiosio

The Debt Management Office (DMO) concluded its December 3, 2025 Nigerian Treasury Bills auction with a total allotment of N709.621 billion across the 91-day, 182-day and 364-day tenors. Although the shorter bills were undersubscribed, the 364-day paper drew strong interest, attracting N697.29 billion in bids against a N450 billion offer. The DMO ultimately allotted N636.46 billion to that tenor alone, accounting for nearly 90 percent of the entire auction.

Why It Happened
Investor appetite shifted firmly toward the longer bill because of its higher yield and stronger return profile. The 364-day stop rate climbed sharply to 17.50 percent from 16.04 percent in the previous auction. Market analysts say the higher pricing reflects inflationary pressures, tighter liquidity conditions and rising demand for safer long term instruments. The 91-day and 182-day bills cleared at unchanged rates of 15.30 percent and 15.50 percent, which made them less competitive in comparison.

Who Benefits
Fixed income investors who are willing to lock in funds for one year are the biggest winners. Dr. Ayodeji Ebo, CEO of Optimus by Afrinvest, noted that the effective yield on the 364-day paper stands near 21.21 percent. Even after withholding tax, the return remains close to 19 percent, making it one of the most attractive risk free instruments currently available. The Federal Government also benefits from securing long dated funding at scale without paying significantly higher costs on the shorter tenors.

Who Loses
Short term investors seeking liquidity have fewer appealing options. Demand for the 91-day and 182-day bills fell sharply with subscriptions at only 44.2 percent and 22.3 percent of their offers. Their lower rates mean investors who cannot commit to a full year may miss out on the outsized yields available on the longer paper.

What the Recognition Signifies
The surge in demand for the 364-day paper signals a broader market shift toward longer, high yielding government instruments as inflation expectations remain elevated. It also shows that investors trust the government’s debt management framework enough to place large volumes in longer dated bills.

What to Expect Next
Analysts anticipate continued strong bidding for the 1-year tenor as long as rates remain elevated. If liquidity tightens further, the DMO may sustain or even adjust stop rates to balance demand across tenors. For portfolio managers, the auction results set the tone for year-end positioning, with the 364-day bill likely to remain the anchor for risk free returns.