CBN Cuts One-Year Treasury Bill Rate to 16.62% as Investors Bid N2.64 Trillion

The Central Bank of Nigeria (CBN) allotted N1.054 trillion at its Wednesday, September 9, 2026, Treasury Bills primary market auction, cutting the stop rate on the one-year bill to 16.62%, its lowest level in recent weeks.

The latest reduction marks the third consecutive cut in the stop rate on the 364-day Treasury bill, extending the easing trend that has emerged in Nigeria’s fixed-income market after more than three years of elevated interest rates and tight monetary conditions.

Investors submitted a combined N2.642 trillion in bids across the three Treasury Bill tenors, significantly exceeding the N750 billion eventually offered at the auction. The CBN ultimately allotted N1.054 trillion, about N304 billion above the N750 billion offer.

The auction also showed that investors remain heavily concentrated at the long end of the market, with the 364-day Treasury bill attracting roughly 96% of total subscriptions.

What you should know

The September 9 auction is important because it provides another indication that the CBN is becoming more comfortable with lower yields on government securities.

The 364-day stop rate fell to 16.62% from 16.84% at the previous auction on September 2. Before that, it had fallen from 17.15% on August 26.

That means the one-year Treasury bill rate has declined by 97 basis points across three consecutive auctions, from 17.59% in August to 16.62% now.

Importantly, the decline happened even as investor demand remained strong.

Investors still want one-year Treasury bills

The strongest feature of the auction was the continued preference for the 364-day instrument.

The one-year bill attracted approximately N2.537 trillion in subscriptions against N500 billion offered for that tenor. The CBN eventually allotted N961.28 billion at a 16.62% stop rate.

This means investors were willing to accept a lower yield while still committing substantial funds to the instrument.

That is significant because it suggests that demand for Nigerian government securities is not simply being driven by investors chasing the highest possible yield. There appears to be strong demand for the combination of government-backed credit quality, relatively attractive naira returns and the longer tenor.

Shorter-tenor bills remain less attractive

The 91-day and 182-day instruments continued to receive considerably less interest.

The 91-day bill attracted about N75.70 billion in subscriptions against N150 billion offered, with N70.47 billion allotted at a 16.30% stop rate.

The 182-day bill attracted N28.97 billion against N100 billion offered, with N22.44 billion allotted at a 16.50% stop rate.

The difference between the short and long ends of the curve shows that investors continue to prefer locking in returns for a longer period, particularly when they believe yields could continue falling.

The auction size was larger than the original tender invitation

There was also an important difference between the initial tender invitation and the eventual auction size.

The CBN and Debt Management Office had initially advertised N500 billion in Treasury Bills for the September 9 auction. However, the amount ultimately offered and allotted was increased during the auction process, with N750 billion offered and N1.054 trillion eventually allotted across the three tenors.

The CBN has the flexibility to vary the amount allotted based on prevailing market conditions and demand.

This is why the final allotment should not be interpreted simply as the government unexpectedly borrowing N1.054 trillion beyond an original fixed limit.

What the falling stop rate means

The stop rate is effectively the yield at which the CBN accepts bids for Treasury Bills.

When the stop rate falls, investors receive a lower return on newly purchased bills, while the government benefits from a lower cost of borrowing.

The latest movement therefore has two sides.

For investors, it means the return available on new one-year Treasury Bills is gradually declining.

For the Federal Government, it means domestic short-term borrowing can become cheaper if the trend extends across other government securities.

The development could also influence pricing across the broader fixed-income market because Treasury Bills serve as an important reference point for other naira-denominated investments.

Is the CBN beginning to ease monetary conditions?

The Treasury Bill market alone does not establish that the CBN has fully shifted to an expansionary monetary policy stance.

However, three consecutive reductions in the one-year Treasury Bill stop rate are an increasingly clear signal that market pricing is moving lower.

The distinction is important.

A lower Treasury Bill stop rate can reflect auction-specific factors such as liquidity, investor demand, government funding needs and the amount of securities being offered. A formal monetary-policy easing cycle would involve decisions around instruments such as the Monetary Policy Rate and other monetary-policy tools.

Nevertheless, sustained declines in short-term yields can precede or accompany broader changes in monetary conditions.

Strong demand despite lower yields is significant

The most interesting part of the auction is that yields are falling while demand remains strong.

Normally, investors may demand higher yields when they see strong competition for scarce investment opportunities. But in this case, the CBN was able to reduce the one-year stop rate while still attracting more than N2.5 trillion in subscriptions for the instrument.

This suggests that liquidity in the financial system remains substantial and that investors may be positioning for further declines in fixed-income yields.

If investors expect rates to fall further, locking in today’s yield for a longer period can make sense because newly issued securities could offer even lower returns later.

What this means for banks and fixed-income investors

Commercial banks, pension funds, asset managers, institutional investors and other participants in the Nigerian money market are likely to reassess their portfolios as Treasury Bill yields decline.

Investors who entered the market earlier at higher yields may benefit from the repricing of existing securities, while investors entering at the latest auction face lower returns.

The trend could also encourage some investors to look beyond Treasury Bills toward longer-dated government bonds, corporate debt or equities if they believe the decline in risk-free yields will continue.

However, the attractiveness of those alternatives will depend on inflation, currency stability, liquidity and the risk associated with each asset class.

What investors should watch next

The key question is whether the 16.62% stop rate represents the beginning of a sustained downward trend or simply another repricing at the long end of the Treasury Bill market.

Investors will be watching:

• The next 364-day Treasury Bill auction and whether the stop rate falls again.
• The CBN’s monetary policy decisions.
• Inflation and inflation expectations.
• Liquidity conditions in the banking system.
• Demand for government securities.
• The naira’s stability and foreign-exchange liquidity.
• Whether yields on longer-dated FGN bonds also begin to decline.

A continued fall in Treasury Bill yields would strengthen the case for a broader decline in domestic borrowing costs.

The bigger picture

The September 9 Treasury Bill auction reinforces a notable shift in Nigeria’s fixed-income market.

The one-year stop rate has now fallen from 17.59% to 16.62% in three consecutive cuts, while investors continue to place substantial funds in government securities.

The combination of falling yields and strong demand suggests that market liquidity remains healthy and that investors are increasingly willing to accept lower returns on sovereign naira assets.

For the government, the trend could gradually reduce the cost of short-term domestic borrowing. For investors, however, it means the exceptionally high yields that characterised much of the recent tightening cycle may be becoming less available.

The next stage will therefore be determined by whether this repricing remains confined to Treasury Bills or develops into a broader easing in Nigeria’s fixed-income and monetary-policy environment.