Primary Market Watch: Treasury Bills Post Auction Analysis – 28 October 2026

DMO rejects N1.84trn bids, pushes T-bill rates lower

The DMO rejected bids heavily for a second auction running. At the Treasury bills auction conducted by the Central Bank of Nigeria (CBN), on behalf of the Federal Government, on Wednesday, 28 October 2026, the DMO offered N800 billion across the three standard maturities, up from N450 billion at the previous auction on 14 October. The 364-day offer was raised to N600 billion from N350 billion, while the 91-day and 182-day offers were increased to N100 billion each from N50 billion.

The auction attracted total subscriptions of N1.91 trillion, up from N1.03 trillion at the previous auction, translating to an overall bid-to-cover ratio of 2.38x compared with 2.29x previously. However, the DMO allotted only N71.16 billion, about 9% of the offer size, rejecting about 96% of total bids, amounting to N1.84 trillion. Consequently, stop rates declined across all tenors, with the 91-day and 364-day rates falling by 10 basis points each to 15.40% and 15.80%, respectively, while the 182-day rate eased by 1 basis point to 15.79%. The decline reverses the 5 basis points uptick in the 364-day stop rate recorded at the previous auction.

Market Backdrop

Ahead of the Treasury bills auction, system liquidity rose to N8.59 trillion from N6.94 trillion at the close of the previous week, supported largely by OMO maturities of N2.13 trillion. This was despite the CBN’s OMO auction on 22 October, where it sold N2.63 trillion across the 138-day and 180-day tenors against an offer of N2.00 trillion, at stop rates of 17.63% and 17.14%, respectively. Benchmark Treasury bill yields also declined, with the average secondary market yield falling by 75 basis points to 17.47% on 27 October from 18.21% on 14 October. The decline was led by the 6-month and 1-month benchmark yields, which fell by 166 and 100 basis points to 16.63% and 16.68%, respectively, while the 9-month and 3-month benchmark yields declined by 79 and 55 basis points to 18.33% and 17.08%, respectively. In contrast, the 12-month benchmark yield rose by 26 basis points to 18.61%.

The combination of elevated system liquidity and declining secondary market yields supported strong demand at the auction, allowing the DMO to reject higher bids and push borrowing costs lower.

Source: CBN, FMDA

Auction Outcome

Investor demand remained concentrated on the 364-day Treasury bill, which attracted subscriptions of N1.84 trillion against an increased offer of N600 billion, translating to a bid-to-cover ratio of 3.06x, up from 2.81x at the previous auction. However, the DMO allotted only N38.38 billion for the tenor, about 6% of the amount offered, rejecting about 98% of bids on the tenor, with bids ranging as high as 18.24%.

Demand at the shorter end of the curve remained weak. The 91-day Treasury bill attracted subscriptions of N51.56 billion against N100 billion offered, resulting in a bid-to-cover ratio of 0.52x, while the 182-day bill recorded subscriptions of N20.27 billion against N100 billion offered, translating to a bid-to-cover ratio of 0.20x. The DMO allotted N22.33 billion and N10.45 billion on the 91-day and 182-day bills, respectively, accepting about 43% and 52% of bids at the two tenors.

Stop rates declined across all tenors, falling by 10 basis points to 15.40% for the 91-day, by 1 basis point to 15.79% for the 182-day, and by 10 basis points to 15.80% for the 364-day tenor. Notably, this marks the first change in the 91-day stop rate since 23 September.

Source: CBN, FMDA

Source: CBN, FMDA

Market Insight

• The DMO rejected about 96% of total bids, amounting to N1.84 trillion of the N1.91 trillion received, allotting only N71.16 billion, as it continued to prioritise lower borrowing costs over the volume of funds raised.
• The 10 basis points decline in the 364-day stop rate to 15.80% reverses the uptick recorded at the previous auction, suggesting that the post-MPR bullish momentum in the primary market has resumed.
• Investor demand improved, with total subscriptions rising to N1.91 trillion from N1.03 trillion, supported by elevated system liquidity of N8.59 trillion, which remained high despite the CBN’s N2.63 trillion OMO sale on 22 October.
• The 12-month benchmark yield rose by 26 basis points to 18.61% even as the 364-day stop rate declined, indicating a divergence between primary and secondary market pricing at the long end of the curve.
• Across the three Treasury bills auctions held so far in Q4 2026, the DMO has raised about N1.31 trillion against N2.15 trillion offered, reflecting its preference for lower rates over meeting its offer size.
• Looking ahead, the trajectory of yields will depend on system liquidity conditions, the pace of CBN’s OMO issuances, where stop rates of 17.63% and 17.14% remain well above Treasury bill rates, and the DMO’s pricing stance at subsequent auctions.