Investors on Edge as CBN Offers ₦1.15 Trillion Treasury Bills Amid Tight Rates
Investors in Nigeria’s fixed-income market are closely watching the Central Bank of Nigeria’s latest Treasury bills auction as the apex bank puts ₦1.15 trillion worth of instruments on offer. This is the second T-bills auction for January 2026, and it comes at a time when liquidity in the banking system is strong, but government borrowing needs remain high.
The auction covers the three standard maturities: 91 days, 182 days, and 364 days. Out of the total offer, ₦150 billion is allocated to the 91-day bills, ₦200 billion to the 182-day bills, while the bulk of ₦800 billion is set aside for the one-year bills. This structure clearly shows the government’s preference for longer-dated instruments as it continues to rely heavily on short-term domestic borrowing to fund operations and manage excess liquidity.
Market participants say this auction is important because it may give fresh signals on where short-term interest rates are headed. Despite recent signs of easing inflation, the CBN has maintained a tight monetary stance, and investors remain cautious about whether inflation will stay on a downward path or reverse.
Dealers note that the dominance of the 364-day bills reflects strong investor appetite for longer tenors that offer relatively higher yields in an uncertain interest rate environment. Many investors are eager to lock in attractive returns now, given concerns about inflation sustainability, exchange rate pressures, and future policy direction.
Recent auction results support this cautious sentiment. In December, stop rates rose across all maturities. The 91-day bills increased to 15.80 per cent, the 182-day bills climbed to 16.50 per cent, while one-year bills were sold at 18.47 per cent. These higher rates came even as headline inflation softened, signalling that the central bank remains wary of declaring victory over inflation and is focused on maintaining financial stability.
Activity in the secondary Treasury bills market has been relatively muted ahead of the auction. Most maturities traded flat as investors adopted a wait-and-see approach. Only a few longer-dated papers recorded notable yield increases, suggesting selective repositioning rather than widespread selling pressure.
Earlier Open Market Operations by the CBN also influenced market sentiment. The bank recently allotted ₦2.64 trillion through OMO bills at stop rates close to 19.4 per cent. Following these sales, average Treasury bill yields rose, reflecting negative sentiment driven by sell-offs in the secondary market.
At the first Treasury bills auction of 2026, the government raised ₦1.14 trillion at higher rates across all maturities, with most of the demand concentrated in one-year bills. Although yields eased slightly afterward due to renewed demand for naira assets, analysts believe the current auction could still see a mild upward pressure on rates, especially at the long end of the curve.
Analysts also point to the mismatch between maturing bills and new issuance. Bills worth about ₦725 billion are set to mature this week, which is significantly lower than the ₦1.15 trillion on offer. This gap increases funding pressure and could push the government to keep rates attractive to sustain investor participation.
Looking beyond Treasury bills, Nigeria’s broader debt outlook adds to market caution. The 2026 fiscal year carries a projected budget deficit of ₦23.85 trillion, with heavy reliance on domestic borrowing. The government plans to raise ₦7.55 trillion in the first quarter of the year alone, a move analysts say could keep yields elevated for longer.
In addition, the Federal Government is expected to repay about ₦1.03 trillion in bond maturities on January 22, 2026, the highest bond maturity payout in recent years. Analysts warn that how investors reinvest these funds could influence foreign exchange demand and short-term pressure on the naira.
Overall, demand at recent auctions has remained strong, driven by investors positioning to benefit from high yields in a tightening monetary environment. However, with rising borrowing needs, inflation risks, and exchange rate concerns still in play, the market is bracing for interest rates to remain firm in the near term.
Investors in Nigeria’s fixed-income market are closely watching the Central Bank of Nigeria’s latest Treasury bills auction as the apex bank puts ₦1.15 trillion worth of instruments on offer. This is the second T-bills auction for January 2026, and it comes at a time when liquidity in the banking system is strong, but government borrowing needs remain high.
The auction covers the three standard maturities: 91 days, 182 days, and 364 days. Out of the total offer, ₦150 billion is allocated to the 91-day bills, ₦200 billion to the 182-day bills, while the bulk of ₦800 billion is set aside for the one-year bills. This structure clearly shows the government’s preference for longer-dated instruments as it continues to rely heavily on short-term domestic borrowing to fund operations and manage excess liquidity.
Market participants say this auction is important because it may give fresh signals on where short-term interest rates are headed. Despite recent signs of easing inflation, the CBN has maintained a tight monetary stance, and investors remain cautious about whether inflation will stay on a downward path or reverse.
Dealers note that the dominance of the 364-day bills reflects strong investor appetite for longer tenors that offer relatively higher yields in an uncertain interest rate environment. Many investors are eager to lock in attractive returns now, given concerns about inflation sustainability, exchange rate pressures, and future policy direction.
Recent auction results support this cautious sentiment. In December, stop rates rose across all maturities. The 91-day bills increased to 15.80 per cent, the 182-day bills climbed to 16.50 per cent, while one-year bills were sold at 18.47 per cent. These higher rates came even as headline inflation softened, signalling that the central bank remains wary of declaring victory over inflation and is focused on maintaining financial stability.
Activity in the secondary Treasury bills market has been relatively muted ahead of the auction. Most maturities traded flat as investors adopted a wait-and-see approach. Only a few longer-dated papers recorded notable yield increases, suggesting selective repositioning rather than widespread selling pressure.
Earlier Open Market Operations by the CBN also influenced market sentiment. The bank recently allotted ₦2.64 trillion through OMO bills at stop rates close to 19.4 per cent. Following these sales, average Treasury bill yields rose, reflecting negative sentiment driven by sell-offs in the secondary market.
At the first Treasury bills auction of 2026, the government raised ₦1.14 trillion at higher rates across all maturities, with most of the demand concentrated in one-year bills. Although yields eased slightly afterward due to renewed demand for naira assets, analysts believe the current auction could still see a mild upward pressure on rates, especially at the long end of the curve.
Analysts also point to the mismatch between maturing bills and new issuance. Bills worth about ₦725 billion are set to mature this week, which is significantly lower than the ₦1.15 trillion on offer. This gap increases funding pressure and could push the government to keep rates attractive to sustain investor participation.
Looking beyond Treasury bills, Nigeria’s broader debt outlook adds to market caution. The 2026 fiscal year carries a projected budget deficit of ₦23.85 trillion, with heavy reliance on domestic borrowing. The government plans to raise ₦7.55 trillion in the first quarter of the year alone, a move analysts say could keep yields elevated for longer.
In addition, the Federal Government is expected to repay about ₦1.03 trillion in bond maturities on January 22, 2026, the highest bond maturity payout in recent years. Analysts warn that how investors reinvest these funds could influence foreign exchange demand and short-term pressure on the naira.
Overall, demand at recent auctions has remained strong, driven by investors positioning to benefit from high yields in a tightening monetary environment. However, with rising borrowing needs, inflation risks, and exchange rate concerns still in play, the market is bracing for interest rates to remain firm in the near term.