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The Central Bank of Nigeria (CBN), acting on behalf of the Debt Management Office (DMO), is set to offer N500 billion in Nigerian Treasury Bills (NTBs) at its next auction, marking the smallest single auction under the third-quarter 2026 issuance programme.
The offer, scheduled for the latest September auction cycle, comprises 91-day, 182-day and 364-day Treasury Bills as the authorities approach the end of a quarter that has seen unusually strong demand for government securities.
The auction comes against a backdrop of easing yields on longer-dated Treasury Bills and significant liquidity expected to return to the banking system through maturing Open Market Operations (OMO) instruments.
N500bn Offer Split Across Three Tenors
The CBN will offer N100 billion each in the 91-day and 182-day Treasury Bills, while the 364-day instrument will account for the remaining N300 billion.
The auction will be conducted through the Dutch auction system.
Money Market Dealers are required to submit bids through the CBN S4 Web Interface between 8:00 a.m. and 11:00 a.m. on September 9, 2026. Successful bidders are expected to receive their allotment letters on September 10, with payment due to the CBN by 11:00 a.m. that day.
Each bid must be submitted in multiples of N1,000, subject to a minimum bid size of N50.001 million.
The CBN retains the discretion to reject bids or adjust the amount offered depending on prevailing market conditions.
Smallest Q3 Treasury Bills Auction
The N500 billion offer is notably below the N700 billion auctions that have characterised several of the CBN’s major Treasury Bills sales during the third quarter.
The reduction makes this the smallest single NTB offer under the Q3 2026 programme, which targets total gross issuance of N5.8 trillion between July and September.
The programme consists of N900 billion in 91-day bills, N900 billion in 182-day bills and N4 trillion in 364-day bills.
The one-year instrument therefore represents about 69% of planned third-quarter issuance, reflecting the strong preference of both the authorities and investors for longer-dated government securities.
Treasury Bills worth approximately N2.644 trillion are also scheduled to mature during the quarter, leaving an estimated N3.16 trillion in net new borrowing under the programme.
Investors Continue to Favour One-Year Bills
The smaller offer comes shortly after the CBN’s September 2 Treasury Bills auction, where investor demand was heavily concentrated in the 364-day instrument.
The auction attracted approximately N3.35 trillion in total subscriptions against N700 billion initially offered.
The 364-day bill alone received about N3.24 trillion in bids against a N500 billion offer, prompting the CBN to allot N762.17 billion on the instrument.
By comparison, demand for the shorter tenors was considerably weaker, with the 91-day bill attracting N76.82 billion against N100 billion offered, while the 182-day bill received only N33.51 billion.
The pattern highlights investors’ continued preference for locking funds into longer-term government securities amid still-attractive yields.
One-Year Treasury Bill Yield Falls Further
The latest auction also follows a second consecutive reduction in the stop rate on the benchmark 364-day Treasury Bill.
The CBN cut the one-year stop rate to 16.84% on September 2 from 17.15% at the previous auction, representing a 31-basis-point decline.
The latest reduction followed a 44-basis-point cut at the August 26 auction, bringing the cumulative decline in the one-year stop rate to 75 basis points across two auctions.
The continued decline has heightened market expectations that Nigerian interest rates could be approaching a turning point, particularly ahead of the CBN’s September Monetary Policy Committee meeting.
N2.94trn OMO Maturities Add to Liquidity
The Treasury Bills auction is also taking place at a time when substantial liquidity is expected to flow back into the financial system.
Approximately N2.94 trillion in OMO maturities is scheduled to hit the banking system during the week, representing a 30.67% increase from the previous week’s N2.25 trillion.
The OMO maturities account for about 97.5% of projected weekly system liquidity inflows of N3.02 trillion.
The relatively modest N500 billion Treasury Bills offer could therefore leave the CBN relying more heavily on OMO operations if it decides to absorb a significant portion of the incoming liquidity.
That balance will be closely watched by fixed-income investors because it could influence short-term market rates and expectations around monetary policy.
CBN Faces Delicate Rate and Liquidity Balance
The latest Treasury Bills auction comes after months of aggressive liquidity management by the central bank.
During the third quarter, the CBN has used both Treasury Bills and OMO instruments to manage liquidity while maintaining relatively attractive yields for investors.
The heavy demand for longer-dated Treasury Bills has allowed the apex bank to raise substantial funds even as it gradually lowers the stop rate on the one-year instrument.
With another large wave of OMO maturities now approaching, however, the central bank faces a different challenge: managing the amount of liquidity returning to the financial system without creating excessive pressure on interest rates.
Market Watches September Policy Direction
The outcome of the latest auction is likely to provide another indication of how investors are positioning ahead of the September MPC meeting.
The combination of falling one-year Treasury Bill yields, strong demand for longer-term government paper and substantial OMO maturities could provide an important signal about market expectations for the direction of monetary policy.
For the government, the N500 billion auction represents another step towards completing the ambitious N5.8 trillion third-quarter Treasury Bills programme.
For investors, attention will centre on subscription levels and the stop rates accepted by the CBN, particularly on the 364-day bill.
The auction could therefore offer fresh evidence of whether the gradual decline in Treasury Bill yields is becoming a broader trend as Nigeria’s monetary authorities move towards the final weeks of the third quarter.
