CBN cuts one-year T-bill yield as N3.62tn subscriptions swamp auction

The Central Bank of Nigeria reduced the stop rate on its one-year treasury bill at Wednesday's primary market auction after investors submitted overwhelming bids. Total subscriptions reached about N3.62tn against the N700bn offered across the three maturities.

One-year bill oversubscribed nearly seven times

The strongest demand came from the 364-day bill, which attracted N3.38tn in bids for an offer size of N500bn. That represented an oversubscription of nearly seven times. Despite the strong demand, the CBN allotted about N1.25tn across the 91-day, 182-day and 364-day instruments. More than N1.02tn of that went to the one-year paper alone, well above the amount initially offered.

The stop rate on the 364-day bill fell to 17.35 per cent from 17.66 per cent at the previous auction, a decline of 31 basis points. Bid rates for the tenor ranged between 16.98 per cent and 20.00 per cent, reflecting investors' willingness to accept lower yields in exchange for locking in longer-term returns.

Shorter tenors hold steady

For the 91-day T-bill maturing on 29 October 2026, the CBN offered N100bn, received subscriptions of N135.74bn, and allotted N130.72bn. The stop rate remained unchanged at 16.30 per cent, while bid rates ranged from 15.97 per cent to 17.50 per cent.

Similarly, the 182-day bill due on 28 January 2027 recorded subscriptions of N104.74bn against an offer of N100bn. The apex bank allotted N99.18bn, maintaining the stop rate at 16.50 per cent despite bid rates ranging between 16.00 per cent and 25.00 per cent.

July pattern and Q3 programme

The latest auction extends a pattern seen throughout July, with institutional investors concentrating heavily on the one-year instrument. The 364-day bill attracted N2.87tn in bids at the July 15 auction and N1.86tn at the 8 July sale, highlighting persistent demand for longer-dated treasury securities.

Wednesday's sale marked the final T-bill auction for July and forms part of the CBN's N5.8tn gross issuance programme for the third quarter of 2026. Allotment letters are scheduled for 30 July 2026, with settlement taking place on the same day.

Analysts say the decline in the one-year stop rate suggests improved liquidity within the financial system. It enables investors to accept lower returns while the CBN continues to issue larger volumes to absorb excess funds and meet the government's financing requirements under the expanded third-quarter treasury bill programme.

Although yields remain attractive across the maturity spectrum, the one-year T-bill continues to provide the highest return. Its effective yield remains close to 21 per cent, making it the preferred option for institutional investors.