CBN cuts one-year T-bill rate to 17.15% despite N3.63tn investor demand
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The Central Bank of Nigeria has reduced the stop rate on its one-year Treasury Bill to 17.15 per cent, even as investors submitted a staggering N3.63 trillion in bids for the instrument.
The latest development signals strong investor appetite for longer-dated government securities and suggests that investors are increasingly willing to lock in returns for a longer period.
At the Central Bank’s primary market auction held on Wednesday, August 26, 2026, investors submitted a total of about N3.79 trillion across the three Treasury Bill maturities offered.
The 364-day bill accounted for approximately 95.9 per cent of the total subscriptions, making it by far the most sought-after instrument at the auction.
CBN lowers borrowing cost
Despite the heavy demand, the CBN reduced the stop rate on the 364-day Treasury Bill by 44 basis points, from 17.59 per cent at the previous auction to 17.15 per cent.
The regulator had offered N500 billion of the one-year instrument but eventually allotted N638.19 billion, representing an additional N138.19 billion above the initial offer.
However, only about 17.6 per cent of the total bids submitted for the 364-day bill were accepted, indicating that the CBN was able to select bids at more favourable borrowing rates amid intense competition among investors.
The yields quoted by investors ranged between 16 per cent and 19.05 per cent, but the CBN settled at 17.15 per cent.
Investors favour longer-term securities
The auction results point to a clear preference for longer-term government securities.
The 364-day instrument received N3.63 trillion in subscriptions against the N500 billion offered, representing a bid-to-cover ratio of about 7.26 times.
By comparison, the 91-day bill attracted N103.32 billion against an offer of N100 billion, while the 182-day instrument recorded just N52.93 billion in subscriptions against N100 billion on offer.
The CBN allotted N89.10 billion on the 91-day bill and N35.59 billion on the 182-day instrument.
The stop rates on both securities remained unchanged at 16.30 per cent and 16.50 per cent respectively.
What the demand means
The concentration of demand in the one-year instrument suggests investors are increasingly looking to secure relatively attractive yields for longer periods rather than repeatedly reinvesting in shorter-term securities.
Financial analysts said the strong demand also provides the CBN with greater flexibility in managing the government’s borrowing costs.
Analyst Jimbe Asalor noted that the auction demonstrated the CBN’s ability to borrow at a lower rate when demand is concentrated around a particular maturity.
He also pointed to the fact that the regulator was able to increase its allotment on the one-year bill while simultaneously reducing the stop rate.
Lagos-based consultant economist Chukwunonso Iheoma said continued investor preference for longer-dated Treasury Bills could support a gradual decline in government borrowing costs and strengthen expectations of eventual interest-rate reductions.
Secondary market yields remain elevated
Despite the lower auction rates, yields in the secondary market remained above the respective stop rates.
The 91-day Treasury Bill was quoted at about 17.45 per cent, while the 182-day and 364-day instruments traded at approximately 17.05 per cent and 17.24 per cent respectively.
The relatively narrow gap between the auction rate and the secondary-market yield for the one-year instrument suggests that investors’ expectations are increasingly aligned around current market rates.
Implications for government borrowing
The latest auction comes at a time when the Federal Government continues to rely heavily on domestic debt instruments to finance its fiscal requirements.
The ability to attract more funds while lowering the interest rate on the one-year instrument could provide some relief to the government’s borrowing costs if the trend continues across subsequent auctions.
For investors, however, the strong demand for the 364-day bill indicates that Treasury Bills remain attractive within the fixed-income market, particularly for institutions seeking relatively predictable returns amid changing interest-rate expectations.
The latest auction therefore presents a notable combination of record-level demand for the one-year instrument and a lower borrowing rate for the government, highlighting a shift in investor preference towards longer-term Nigerian government securities.
