Investors positio for positive yields as CBN puts N700bn TBs for auction

The Central Bank of Nigeria (CBN) has conducted its second Treasury Bills (TBs) auction for August 2026, offering N700 billion across three maturities as investors continue to position for attractive yields.

The auction held on Wednesday, August 26, comprised N100 billion in 91-day Treasury Bills, N100 billion in 182-day bills and N500 billion in 364-day instruments, making the one-year tenor the dominant component of the offer.

The auction was conducted through the Dutch auction system, with authorised Money Market Dealers submitting bids through the CBN S4 Web Interface.

The latest exercise comes against the backdrop of exceptionally strong demand for government securities. At the August 12 auction, investors submitted N4.41 trillion in bids against an advertised N700 billion, with the 364-day bill alone attracting N4.19 trillion. The CBN subsequently allotted about N1.46 trillion.

Despite the overwhelming demand, the apex bank raised the stop rate on the 364-day bill by 24 basis points to 17.59 per cent from 17.35 per cent, while rates on the 91-day and 182-day instruments remained at 16.30 per cent and 16.50 per cent respectively.

Market analysts had expected Wednesday’s auction to produce relatively high yields, particularly at the longer end of the curve.

Research by Meristem, published through Proshare, projected a mild upward bias in Treasury Bill yields, citing a 76-basis-point increase in average secondary-market T-Bill yields to 18.89 per cent as of August 24, from 18.13 per cent on August 12.

Market guidance ahead of the auction placed the indicative range for the 91-day bill at 15.80–16.40 per cent, 182-day bill at 15.90–16.60 per cent and 364-day bill at 16.70–17.50 per cent.

The strong preference for the one-year instrument has been attributed to investors’ desire to lock in relatively attractive returns before any possible decline in interest rates.

The August auction also comes after the CBN cancelled an earlier N700 billion Treasury Bills sale scheduled for August 6, following the withdrawal of about N4.69 trillion from the banking system through back-to-back Open Market Operations auctions.

The outcome of the August 26 auction is expected to provide a fresh indication of the direction of short-term interest rates and investor appetite for Nigerian government securities.

A strong subscription, particularly for the 364-day bill, would reinforce the market’s preference for locking in current yields. Conversely, weaker demand could put additional pressure on the CBN to offer more competitive rates.