Primary Market Watch: Treasury Bills

Post Auction Analysis – 29 July 2026 

he Central Bank of Nigeria (CBN), on behalf of the Federal Government, conducted the final Treasury bills auction for July 2026, offering N700 billion across the three standard maturities. The auction attracted robust investor demand, with total subscriptions reaching N3.62 trillion, translating to an overall bid-to-cover ratio of 5.17x. Although demand for the 364-day Treasury bill moderated slightly relative to the previous auction, it remained exceptionally strong, while investor participation improved across the shorter tenors. Reflecting the sustained demand, the DMO allotted N1.25 trillion, approximately 78.2% above the initial offer size. The strong demand also enabled the DMO to lower its borrowing cost at the long end, with the 364-day stop rate declining by 31 basis points to 17.35%. 

Market Backdrop 

Ahead of the Treasury bills auction, system liquidity remained supportive despite the Central Bank’s liquidity sterilisation through the Open Market Operations (OMO) auction conducted on 28 July 2026. Although the OMO auction absorbed about N3.48 trillion through allotments across the three maturities, the liquidity impact was largely offset by N2.19 trillion in maturing OMO bills. In addition, the market received N211.62 billion from Treasury bills maturities on the auction date, providing additional liquidity that supported investor participation. 

 Meanwhile, benchmark Treasury bill yields edged higher ahead of the auction, with the average secondary market yield increasing to 18.51% on 28 July from 18.30% at the previous auction. The increase was driven primarily by higher yields at the short and medium segments of the curve, as the 1-month and 6-month benchmark yields rose to 16.69% and 19.08%, respectively. In contrast, yields at the longer end moderated slightly, with the 9-month and 12-month benchmark yields easing to 19.84% and 20.29%, respectively. The elevated yield environment, coupled with ample system liquidity, continued to support demand for government securities, particularly the one-year Treasury bill. 

Source: CBN, FMDA 

Auction Outcome 

Investor demand remained firmly concentrated on the 364-day Treasury bill, which attracted subscriptions of N3.38 trillion against an offer of N500 billion, translating to a bid-to-cover ratio of 6.76x. While this was slightly below the 7.18x recorded at the previous auction, it nonetheless reflected sustained investor appetite for longer-dated government securities. In response, the DMO allotted N1.02 trillion for the tenor, more than double the initial amount offered. 

Demand at the shorter end of the curve strengthened noticeably compared with the previous auction. The 91-day Treasury bill attracted subscriptions of N135.74 billion against N100 billion offered, resulting in a bid-to-cover ratio of 1.36x, compared with 0.95x previously. Similarly, the 182-day bill recorded subscriptions of N104.74 billion, translating to a bid-to-cover ratio of 1.05x, an improvement from 0.68x at the previous auction. The improved participation suggests that investors were increasingly willing to take positions across the curve rather than concentrating exclusively on the one-year maturity. 

Consistent with the strong demand, the 364-day stop rate declined further to 17.35% from 17.66% at the previous auction, indicating that the DMO was able to secure funding at a lower cost despite the sizeable subscription level. Meanwhile, the stop rates on the 91-day and 182-day Treasury bills remained unchanged at 16.30% and 16.50%, respectively. 

Source: CBN, FMDA 

Market Insight 

• Investor demand for Treasury bills remained robust, with total subscriptions exceeding N3.6 trillion, underscoring sustained appetite for sovereign securities despite the sizeable OMO auction conducted a day earlier. 

• Although demand for the 364-day Treasury bill moderated marginally from the previous auction, it remained exceptionally strong, while improved bid-to-cover ratios at the 91-day and 182-day tenors indicate a broadening of investor participation across the yield curve. 

• The 31-basis-point decline in the 364-day stop rate suggests that favourable liquidity conditions and sustained investor demand enabled the DMO to reduce its borrowing cost at the long end without compromising subscription levels. 

• The substantial over-allotment of N1.25 trillion, representing approximately 78% above the initial offer size, reinforces the DMO’s continued willingness to accommodate strong market demand while meeting the Federal Government’s short-term financing requirements. 

• Looking ahead, system liquidity is expected to remain supportive in the near term following the N2.19 trillion OMO maturities and N211.62 billion Treasury bills repayment. However, the pace of further yield moderation will depend on subsequent liquidity management operations by the CBN and the size and pricing of future primary market issuances.