DMO Raises ₦930.35bn From Treasury Bills As Investors Chase Higher Yields

The Debt Management Office (DMO) raised a total of ₦930.35bn through Treasury Bills (T-bills) auctions in September 2025, representing a sharp 95.03 per cent increase from the ₦477.04bn sold in August, amid a high-interest-rate environment that continues to attract yield-hungry investors.

The figures, contained in the FMDQ Markets Monthly Report for September 2025 and obtained by THE WHISTLER, highlight renewed investor appetite for sovereign debt instruments despite tight liquidity conditions in the domestic financial system.

According to the report, the surge in T-bill sales came as the Central Bank of Nigeria (CBN) increased stop rates across standard tenors at its primary market auctions.

The move came unexpectedly after several weeks of sustained disinflation, relative exchange rate stability, and a recent benchmark interest rate cut that had led some analysts to anticipate a moderation in yields.

Market watchers said the upward adjustment in yields underscores the CBN’s cautious stance amid persistent liquidity constraints. Deposit money banks, constrained by tight funding conditions, were unable to make large bids, though analysts suggested that stronger subscriptions could have prompted the apex bank to lower rates instead.

Despite these liquidity headwinds, T-bills remained attractive to investors seeking inflation-beating returns. The elevated Monetary Policy Rate (MPR) has pushed yields higher across fixed-income securities, drawing demand from both institutional and retail investors looking to lock in short-term gains.

In addition to the T-bill auctions, the DMO also raised ₦576.62bn through Federal Government Bonds (FGN Bonds) during the period, a 323.48 per cent increase from the ₦136.16bn recorded in August 2025.

Both instruments recorded strong investor participation, with T-bills and FGN Bonds oversubscribed by 238.13 per cent and 530 per cent, respectively.

Meanwhile, the Central Bank’s Open Market Operations (OMO) Bills sales declined sharply to ₦620.65bn, down 70.75 per cent month-on-month from ₦2.12trn in August.

Nonetheless, demand for the CBN’s liquidity management instruments remained robust, with OMO bills oversubscribed by an impressive 1,866 per cent.

Elsewhere in the market, Commercial Paper (CP) activity showed signs of weakness, reflecting broader risk aversion in the non-sovereign debt space. The total outstanding value of CPs fell by 17.76 per cent month-on-month to ₦1.16trn, largely due to maturities worth ₦261.57bn during the review period.

Overall, total secondary market turnover on the FMDQ Exchange stood at ₦49.57trn in September 2025, marking a 22.43 per cent decline from ₦63.9trn in August. However, on a year-on-year basis, activity increased by 37.7 per cent compared to ₦36trn recorded in September 2024.

The report indicated that foreign exchange and CBN bills transactions dominated market activity, jointly accounting for 71.24 per cent of total turnover during the month.

Analysts believe the data reflects the impact of sustained monetary tightening and investor repositioning toward sovereign securities, which remain relatively safer amid elevated interest rates, tight system liquidity, and muted activity in the private credit market.

While the sovereign debt segment continues to attract strong participation, the non-sovereign investment landscape, including corporate debt and commercial papers, has slowed, underscoring the broader implications of high borrowing costs and constrained financial conditions on private sector financing.