The Central Bank of Nigeria increased the stop rate on its benchmark 364-day Treasury Bill to 17.59 per cent at Wednesday’s auction, moving against market expectations that heavy demand would force borrowing costs lower.
Investors submitted a combined N4.4 trillion in bids across the three tenors against the N700 billion on offer, according to results from the August 12, 2026 sale. The decision marked a clear reversal from the previous auction on July 29, when the apex bank cut the one-year stop rate by 31 basis points even though subscriptions had reached nearly seven times the advertised amount.
This time, demand for the 364-day bill alone hit N4.19 trillion more than eight times the N500 billion offered yet the Central Bank raised rather than held or reduced the clearing rate.
Auction Results
The 364-day bill saw N500 billion offered, N4.19 trillion subscribed and N1.26 trillion allotted. The stop rate rose 24 basis points to 17.59 per cent from 17.35 per cent. The 182-day bill, with N100 billion on offer, attracted N63.97 billion in bids and was allotted N47.48 billion at an unchanged 16.50 per cent. The 91-day bill drew N162.21 billion against N100 billion offered and was allotted N148.57 billion at a steady 16.30 per cent.
Maturities fall on November 12, 2026 for the 91-day paper, February 11, 2027 for the 182-day bill and August 12, 2027 for the 364-day instrument.
Despite the scale of oversubscription, the Central Bank allotted N1.26 trillion against the N500 billion advertised for the longest tenor an overshoot of N760 billion while simultaneously raising the rate it was prepared to pay.
Liquidity and Policy Context
The auction forms part of the Central Bank’s third-quarter 2026 Treasury Bills programme, which targets N5.8 trillion in gross issuance between July and September to help finance the government’s fiscal deficit of roughly N29.20 trillion. It is the second consecutive large-offer sale in which the 364-day bill cleared above 17 per cent, keeping its yield well above headline inflation.
The sale followed a week of substantial liquidity inflows into the banking system, including a reported N2.48 trillion Open Market Operations repayment that settled on August 11 as part of a broader N5.21 trillion net injection. In July alone the Central Bank sterilised N7.2 trillion through OMO sales, pushing cumulative sterilisation for 2026 past N50 trillion.
The decision to hike the long-tenor rate even as cash sat heavily with banks suggests the auction is being used not only as a funding tool but also as an additional means of managing liquidity.
Market Implications
For investors, the outcome indicates that the Central Bank remains willing to pay elevated yields for longer-dated funds despite abundant demand. This may extend the window for attractive Treasury Bill returns and raises questions about how firmly the apex bank is committed to the rate-easing path that markets had begun to price in ahead of the September Monetary Policy Committee meeting.
The 91-day and 182-day stop rates were left unchanged, while the 182-day bill was again undersubscribed, attracting only 64 per cent of its offer. Analysts continue to expect a possible first rate cut at the September meeting and view current levels above 17 per cent on the one-year instrument as potentially among the last opportunities to lock in such yields.
