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The Central Bank of Nigeria (CBN) has lowered the stop rate on its one-year Treasury Bill to 17.15%, even as investors placed N3.63 trillion in bids for the 364-day instrument, underscoring strong demand for longer-dated government securities.
The development followed the August 26, 2026 Primary Market Auction, where the CBN offered a combined N700 billion across 91-day, 182-day and 364-day Treasury Bills. Total subscriptions reached approximately N3.79 trillion, representing more than five times the amount offered.
One-Year Bill Attracts Bulk of Demand
The 364-day instrument dominated investor interest, receiving N3.63 trillion in subscriptions against the N500 billion initially offered.
That translates to a bid-to-cover ratio of approximately 7.26 times, meaning investors sought more than seven times the amount the CBN planned to raise through the instrument.
Despite the intense competition, the CBN reduced the stop rate to 17.15%, down 44 basis points from the previous auction’s 17.59%.
The regulator eventually allotted N638.19 billion, exceeding the original offer by N138.19 billion, or about 27.6%.
However, only about 17.6% of the N3.63 trillion submitted for the one-year bill was accepted, indicating that the CBN was able to select bids at its preferred yield level.
Shorter Tenors Record Weaker Appetite
Investor interest was considerably lower for the shorter-dated instruments.
The 91-day Treasury Bill attracted N103.32 billion in subscriptions against an offer of N100 billion. The CBN allotted N89.10 billion at an unchanged stop rate of 16.30%.
The 182-day bill recorded N52.93 billion in bids against N100 billion on offer. The CBN subsequently allotted N35.59 billion, also at an unchanged stop rate of 16.50%.
The distribution of demand shows a clear preference for the longer-dated security. About 95.9% of total subscriptions at the auction were directed towards the 364-day bill, while the 91-day and 182-day instruments accounted for approximately 2.7% and 1.4%, respectively.
Investors Lock In Longer-Term Returns
Market analysts said the concentration of demand around the one-year bill suggests investors are increasingly willing to lock in relatively attractive returns for longer periods rather than repeatedly reinvesting in shorter-term securities.
Financial sector analyst Jimbe Asalor said the auction demonstrated the CBN’s ability to raise more funds while simultaneously lowering the borrowing cost on the longer-dated instrument.
The secondary market also offered a closely aligned pricing signal, with the 364-day Treasury Bill yielding 17.24%, just nine basis points above the auction’s 17.15% stop rate.
Liquidity Supports Fixed-Income Demand
The strong auction performance comes against a backdrop of improved liquidity conditions and sustained investor appetite for naira-denominated fixed-income securities.
Ahead of the auction, the average secondary-market Treasury Bill yield had risen to 19.10% on August 24, from 18.17% on August 12.
The 12-month benchmark yield stood at 20.34% on August 24, creating a relatively attractive environment for investors seeking fixed-income returns.
The CBN also conducted an Open Market Operations auction during the same period, where N4.26 trillion in bids were submitted for N1 trillion initially offered. The regulator allotted N2.80 trillion, further highlighting the amount of liquidity seeking government securities.
What the Auction Means for Borrowing Costs
The latest outcome could have implications for the government’s domestic borrowing costs if strong demand for longer-tenor Treasury Bills persists.
Lagos-based economist Chukwunonso Iheoma said continued preference for longer-dated instruments could support a gradual decline in government borrowing costs and strengthen expectations of lower interest rates over time.
For the CBN, the auction provides evidence that investors remain willing to commit substantial funds to government securities even when offered yields are reduced.
The combination of N3.63 trillion in demand for a N500 billion one-year offer, a 44-basis-point rate cut and N638.19 billion in allotments points to a fixed-income market where investor appetite remains strong, particularly at the longer end of the Treasury Bill curve.
