Demand for the 364-day bill reached N3.63tn as investors sought longer-term yields, allowing the CBN to raise N638.19bn at a lower stop rate

Investors have shown a striking preference for longer-term government securities, with the Central Bank of Nigeria’s latest Treasury Bills auction attracting N3.63tn in bids for the one-year instrument despite a reduction in its stop rate.

Also read: CBN reports positive $52.5bn reserve milestone

At the primary market auction conducted by the CBN on Wednesday, August 26, 2026, the 364-day Treasury Bill accounted for 95.9 per cent of the N3.79tn total subscriptions received across the three maturities.

The overwhelming demand came as the CBN reduced the stop rate on the one-year bill by 44 basis points to 17.15 per cent, from 17.59 per cent at the previous auction.

The result points to a notable shift in investor appetite towards longer-dated government securities, with participants appearing increasingly willing to lock in yields for a longer period rather than concentrate on shorter instruments that require more frequent reinvestment.

The CBN had offered N700bn across the three maturities, comprising N100bn each for the 91-day and 182-day bills and N500bn for the 364-day instrument.

Total subscriptions nevertheless climbed to approximately N3.79tn, more than five times the amount offered.

The 364-day bill was the clear standout, receiving N3.63tn in bids, equivalent to about 7.26 times the N500bn initially offered.

The CBN ultimately allotted N638.19bn on the one-year instrument, exceeding the original offer by N138.19bn.

Despite the additional allotment, only about 17.6 per cent of the bids submitted for the security were accepted, underscoring the strength of competition among investors.

Investors quoted yields ranging from 16.00 per cent to 19.05 per cent, but the CBN settled at 17.15 per cent.

The outcome suggests that the intense demand gave the regulator sufficient room to reject bids carrying higher borrowing costs while still raising more than the amount initially planned.

Financial sector analyst Jimbe Asalor said the concentration of subscriptions in the one-year instrument indicated that investors could be placing greater value on securing relatively attractive yields for an extended period rather than repeatedly rolling over shorter-term securities.

He said the auction also demonstrated the CBN’s ability to reduce its borrowing cost when demand is concentrated around a particular maturity.

“The CBN’s ability to borrow more cheaply when demand is concentrated around a particular maturity” was evident in the latest auction, Asalor said.

He noted that the regulator raised N638.19bn on the 364-day bill at 17.15 per cent while simultaneously reducing the stop rate by 44 basis points.

“The nine-basis-point difference between the auction stop rate and the 17.24 per cent secondary-market yield also indicates that the one-year segment is now trading relatively close to market expectations,” he added.

The strong appetite for the one-year instrument contrasted sharply with the relatively subdued demand at the shorter end of the yield curve.

The 91-day bill attracted N103.32bn in subscriptions against the N100bn offered. The CBN allotted N89.10bn at an unchanged stop rate of 16.30 per cent.

Demand was weaker for the 182-day instrument, which attracted only N52.93bn against N100bn on offer.

The regulator allotted N35.59bn on the six-month bill, also leaving its stop rate unchanged at 16.50 per cent.

The divergent results show that investors were not simply seeking government securities across all maturities. Instead, demand was heavily concentrated on the longer-dated instrument, despite its lower auction rate.

Secondary-market trading also provided an indication of where investors currently perceive yields to be heading.

The 91-day bill was quoted at 17.45 per cent, while the 182-day and 364-day instruments traded at 17.05 per cent and 17.24 per cent respectively.

The secondary-market yield on the one-year bill was therefore only nine basis points above the auction stop rate, suggesting relatively close alignment between the primary and secondary markets.

For investors, the appeal of the longer tenor may extend beyond the headline yield. Locking in a fixed return for 364 days can reduce the reinvestment risk associated with repeatedly rolling over shorter-dated securities, particularly where expectations of future interest-rate reductions are strengthening.

Lagos-based consultant economist Chukwunonso Iheoma said the trend could become significant if investors maintain their preference for longer-dated Treasury Bills.

He said sustained demand for longer maturities could support a gradual reduction in government borrowing costs while strengthening expectations that interest rates could eventually move lower.

The auction also comes against the backdrop of an evolving Nigerian fixed-income market, where investors have been closely watching inflation, monetary policy and government borrowing requirements.

For the CBN, the ability to raise more than the initially offered amount at a lower rate provides an encouraging signal about demand for government debt, while the concentration of bids offers useful information about investor expectations.

For the wider economy, sustained demand for longer-term securities could help establish a more predictable borrowing environment for the government if yields continue to moderate.

However, the latest auction alone does not establish a lasting downward trend in interest rates.

Future auctions, inflation developments, monetary policy decisions and liquidity conditions will determine whether the strong appetite for longer-dated securities becomes a durable feature of Nigeria’s fixed-income market.

Also read: CBN reports positive $52.5bn reserve milestone

For now, the message from Wednesday’s auction is clear: investors were prepared to commit substantial funds for a year, even at a lower rate, while demand for shorter-term Treasury Bills remained comparatively restrained.