Primary Market Watch: Treasury Bills

Post Auction Analysis – 8 July 2026

The Central Bank of Nigeria (CBN), on behalf of the Federal Government, conducted its Treasury bills auction on 8 July 2026, offering N700 billion across the three standard maturities. The auction produced another strong outcome at the long end of the curve, broadly in line with our expectation, as investor demand remained heavily concentrated on the 364-day Treasury bill. Reflecting the strong demand, the DMO allotted a total of N1.06 trillion, representing an over-allotment of 52% above the initial offer size.

Market Backdrop

Ahead of the auction, market liquidity improved significantly following the repayment of N2.21 trillion in maturing OMO bills on 7 July. With no immediate OMO auction conducted to re-absorb the liquidity, excess funds remained in the banking system, reflected in an 87% increase in Standing Deposit Facility (SDF) placements to N4.60 trillion from N2.46 trillion, while total system liquidity edged up to N4.87 trillion from N4.85 trillion the previous day.

Secondary market Treasury bill yields remained broadly elevated ahead of the auction. While the 1-month and 12-month benchmark yields moderated slightly to 16.07% and 19.48%, respectively, the 3-month, 6-month and 9-month benchmark yields increased to 17.58%, 18.90% and 20.04%, respectively, reflecting continued investor demand for attractive short-term returns.

Source: CBN, FMDA

Auction Outcome

Investor demand remained overwhelmingly concentrated on the 364-day bill, which attracted N1.86 trillion in subscriptions against N500 billion offered, translating to a bid-to-cover ratio of 3.71x, up sharply from 2.08x at the previous auction. The CBN eventually allotted N935.32 billion, significantly above the initial offer amount, reflecting its willingness to accommodate the strong investor demand.

Demand for the shorter tenors remained relatively weak. The 91-day bill recorded subscriptions of N146.54 billion against N100 billion offered, implying a bid-to-cover ratio of 1.47x, while the 182-day bill remained undersubscribed with a bid-to-cover ratio of just 0.30x.

Pricing remained firm across the curve. The 364-day stop rate increased further to 17.70% from 17.34% at the previous auction, while the 91-day stop rate edged up to 16.30% from 16.28%. The 182-day stop rate remained unchanged at 16.50%.

Source: CBN, FMDA

FMDA View

• The strong demand for the 364-day Treasury bill reinforces investors’ preference for locking in elevated yields at the longer end of the curve.
• The repayment of N2.21 trillion in OMO bills, coupled with the absence of immediate liquidity sterilisation, likely supported stronger investor participation at the auction.
• Despite the strong demand, the increase in the 364-day stop rate suggests that investors continue to demand higher compensation before committing funds over a longer tenor.
• The net issuance of approximately N550.21 billion indicates that the auction remains liquidity-absorbing overall, although the immediate impact was softened by the sizeable OMO maturity repayment.
• The weak demand for the 182-day bill continues to suggest that investors remain selective, preferring either short-duration liquidity or longer-tenor instruments offering more attractive yields.