CBN offers N700bn NTBs as investors eye higher 364-day rates

The Central Bank of Nigeria (CBN), on behalf of the Debt Management Office (DMO), will offer N700 billion in Nigerian Treasury Bills (NTBs) on Wednesday, with investors closely watching the 364-day instrument after the apex bank unexpectedly raised its one-year stop rate at the previous auction.

The second and final NTB auction for August comprises N100 billion for the 91-day bill, N100 billion for the 182-day bill and N500 billion for the 364-day bill, according to the CBN’s Invitation to Tender obtained by Nairametrics.

Authorised money-market dealers are required to submit bids through the CBN S4 Web Interface between 8:00 a.m. and 11:00 a.m. on August 26, with the auction conducted through the Dutch auction system.

Each bid must be in multiples of N1,000, subject to a minimum of N50.001 million, while dealers may submit multiple bids for themselves, non-money-market dealers or members of the public.

The auction results are expected to be released today, with allotment letters due on Thursday, August 27.

The market’s biggest focus is likely to remain the 364-day bill, which has consistently attracted the bulk of investor demand and accounted for the sharpest movement in yields in recent auctions.

At the August 12 auction, the CBN received N4.4 trillion in subscriptions, more than six times the N700 billion advertised offer.

The 364-day bill alone attracted N4.19 trillion in bids, making it more than eight times oversubscribed against the N500 billion offered.

Despite the overwhelming demand, the CBN raised the one-year stop rate by 24 basis points to 17.59 per cent, from 17.35 per cent previously.

The 91-day and 182-day bills maintained stop rates of 16.30 per cent and 16.50 per cent, respectively.

The CBN ultimately allotted about N1.46 trillion at the August 12 auction, more than double the advertised amount, including N1.26 trillion on the 364-day tenor.

The latest auction will therefore provide an important signal on whether the recent increase in the one-year rate was temporary or marks a shift in the CBN’s Treasury-bill pricing strategy.

The August auction cycle has already been unusual.

The CBN cancelled an initially scheduled N700 billion auction for August 6, shortly after it absorbed a combined N4.69 trillion from the banking system through back-to-back OMO auctions on August 3 and 4.

The cancellation fuelled concerns that another large securities sale could tighten system liquidity excessively.

The apex bank eventually returned to the primary market on August 12.

The latest auction also comes against changing liquidity conditions. The banking system received N2.48 trillion in OMO repayments on August 11, contributing to a broader N5.21 trillion net liquidity injection between August 4 and 11.

That combination of abundant liquidity and strong demand for government securities has created a complex environment for pricing, particularly as investors balance attractive fixed-income returns against expectations of lower interest rates later in the year.

The 364-day stop rate had been declining through July, reaching 17.35 per cent by the end of the month after rate cuts at the July 15 and July 29 auctions.

The reversal on August 12 therefore caught the market’s attention.

The latest Treasury Bills sale is part of the CBN’s N5.8 trillion gross NTB issuance programme for Q3 2026, covering July to September.

August 12, August 26 and September 2 are among the six larger auction dates in the programme, with N700 billion offered at each session.

Market participants will now be watching whether overwhelming demand again prompts the CBN to allot significantly above the advertised N700 billion.

They will also be looking for the direction of the 364-day stop rate, particularly as market expectations build around possible monetary easing at the September Monetary Policy Committee meeting.

For investors, the auction offers an opportunity to lock in relatively attractive naira yields before any potential rate cuts, while for the Federal Government, strong demand could support continued domestic borrowing at manageable rates.