The Central Bank of Nigeria (CBN) is set to conduct its second Treasury bills auction of 2026 today, offering instruments worth N1.15 trillion across the standard 91-day, 182-day, and 364-day tenors, as the government ramps up domestic borrowing to fund a widening fiscal deficit amid persistent liquidity in the banking system.
According to the offer circular released on Wednesday, the auction allocates N150 billion to the 91-day bills, N200 billion to the 182-day maturity, and a substantial N800 billion to the one-year paper — reflecting continued investor preference for longer-dated securities that offer relatively attractive returns in an environment of policy uncertainty.
Market participants are closely monitoring the outcome for fresh signals on short-term interest rate direction, particularly as recent auctions have shown firm or rising stop rates despite softer headline inflation prints in late 2025. Dealers note that the heavy weighting toward the 364-day bills underscores both the government’s funding strategy and investors’ desire to lock in yields before any potential policy pivot.
In the previous auction on January 7, 2026, the government raised N1.14 trillion at elevated stop rates across all maturities. The 91-day paper was allotted at N108.17 billion, the 182-day tenor at N48.23 billion, and the one-year bills at N987.78 billion. Yields subsequently eased slightly in the secondary market, with the average one-year bill yield falling to around 17.50–18.10% on improved demand for naira assets.
However, secondary market activity has remained subdued overall, with most maturities trading flat in recent sessions. Only select papers — such as those maturing April 9, 2026, and January 7, 2027 — saw notable yield increases of 58 basis points and 12 basis points respectively, indicating selective rather than broad-based repositioning.
Earlier open market operations saw the CBN allot N2.64 trillion across 203-day and 245-day papers at stop rates of 19.38% and 19.39%, contributing to a mild upward drift in average Treasury bill yields to 18.14%. Analysts say this reflects ongoing efforts to mop up excess liquidity while funding maturing obligations.
Fixed income strategist Matilda Adefalujo of Meristem Stockbrokers expects stop rates to remain broadly stable but with a mild upward bias at the long end. “The frontloading of government borrowing, combined with N725.19 billion in maturities this week — far below the N1.15 trillion on offer — will keep funding pressures elevated,” she said. “Investors are likely to demand higher rates on one-year bills, especially given secondary market levels around 17.50%.”
The auction comes against the backdrop of Nigeria’s projected 2026 fiscal deficit of N23.85 trillion, with the Federal Government planning to borrow N7.55 trillion from the domestic market in the first quarter alone. The Treasury bills issuance calendar for Q1 2026 highlights the scale of short-term financing needs, which analysts say could sustain elevated yields across the curve.
With inflation having eased to 15.15% in December 2025 (following a methodological rebasing) and external reserves stable above $45 billion, the CBN continues to balance liquidity management with the need to anchor inflation expectations and support naira stability. The outcome of today’s auction will provide the latest gauge of investor appetite for government paper and the direction of short-term rates in the months ahead.
