The Central Bank of Nigeria (CBN) reduced interest rates on two key maturities at its Treasury Bills auction held on March 25, 2026, reflecting abundant liquidity in the banking system and a gradual easing bias following the recent Monetary Policy Rate cut.
Auction results obtained by Nairametrics showed that stop-out rates on the 182-day and 364-day instruments declined by 20 basis points each to 16.42% and 16.43% respectively, while the 91-day bill remained unchanged at 15.95%.
The auction offered a total of N400 billion across the three tenors, but investor demand significantly exceeded supply, particularly for the longer-dated paper.
Breakdown of the results:
– The 364-day bill attracted the strongest interest with N2.73 trillion in subscriptions against a N200 billion offer. The CBN allotted N394.88 billion.
– The 91-day bill recorded near-full subscription of N98.71 billion against the N100 billion offered, with N97.75 billion allotted.
– The 182-day bill saw weaker demand, drawing N66.58 billion in bids against N100 billion offered, with only N28.04 billion allotted.
The heavy concentration of bids on the 364-day tenor highlights investors’ preference for locking in yields amid expectations of further rate moderation and the prevailing liquidity surplus estimated to exceed N8 trillion in the financial system.
Analysts interpret the 20 basis point decline in longer-tenor yields as a clear signal that rates may continue to ease if current liquidity conditions persist. Institutional investors appear to be front-loading positions in longer-dated securities to secure attractive returns before potential further softening.
This auction follows a consistent pattern observed in recent weeks, where subscriptions have far outstripped offers and demand has skewed toward longer maturities:
– On March 18, N3.06 trillion was subscribed against a N1.05 trillion offer.
– On March 11, subscriptions reached N2.78 trillion against N850 billion offered.
– On March 4, N2.34 trillion was bid for against N1.01 trillion allotted.
The outcome reinforces the CBN’s shift toward more market-driven pricing through the Dutch auction system while underscoring the persistent surplus liquidity in the system, which continues to exert downward pressure on yields.
With the recent 50 basis point cut in the Monetary Policy Rate to 26.5%, the March 25 auction provides early evidence of easing transmission into the fixed-income market. Market participants will be watching closely to see whether this trend persists in subsequent auctions as the CBN balances liquidity management with its broader goal of supporting economic growth.
