The Central Bank of Nigeria (CBN) has raised the stop rate on its benchmark 364-day Treasury bill to 17.59%, despite investors submitting bids worth N4.4 trillion for instruments valued at only N700 billion.
The outcome followed the Treasury Bills auction conducted on Wednesday, August 12, 2026, with the strong demand concentrated on the one-year instrument.
Investors submitted N4.19 trillion in bids for the 364-day bill against an offer of N500 billion, representing more than eight times the amount on offer.
Despite the overwhelming demand, the CBN increased the stop rate by 24 basis points to 17.59%, from 17.35% at the previous auction on July 29.
The apex bank also allotted N1.26 trillion on the 364-day instrument, exceeding the advertised amount by N760 billion.
The latest decision contrasts with the July 29 auction, when the CBN reduced the 364-day stop rate by 31 basis points despite subscriptions reaching nearly seven times the amount offered.
The stop rates for the shorter-tenor instruments remained unchanged.
The 182-day Treasury bill attracted N63.97 billion in subscriptions against N100 billion offered, with N47.48 billion allotted. Its stop rate remained at 16.50%.
Similarly, the 91-day bill attracted N162.21 billion in bids against an offer of N100 billion, with N148.57 billion allotted at a stop rate of 16.30%.
The three instruments have maturity dates of November 12, 2026, February 11, 2027 and August 12, 2027, respectively.
The auction suggests that the CBN remains willing to maintain elevated yields on longer-dated government securities, despite strong investor demand and increased liquidity in the banking system.
The latest auction is part of the CBN’s third-quarter 2026 Treasury Bills Issuance Programme, which targets N5.8 trillion in gross issuance between July and September. The programme is partly aimed at supporting the financing of the Federal Government’s projected N29.20 trillion fiscal deficit.
The one-year Treasury bill has now cleared above 17% in successive major auctions, keeping its yield above headline inflation and maintaining its attractiveness to fixed-income investors.
The latest auction also comes after significant liquidity injections into the banking system, including a N2.48 trillion repayment from an Open Market Operation (OMO) transaction on August 11. The CBN reportedly injected a net N5.21 trillion into the banking system over the preceding week.
However, the central bank has continued to sterilise excess liquidity through OMO operations. In July alone, it reportedly mopped up N7.2 trillion through OMO sales.
The increase in the 364-day stop rate could sustain strong investor interest in Treasury bills, particularly among institutional investors seeking relatively high yields.
It also complicates expectations of an imminent decline in fixed-income yields ahead of the next Monetary Policy Committee (MPC) meeting, where market participants have been anticipating a possible reduction in interest rates.
Analysts cited in the report expect the September MPC meeting could mark the beginning of the rate-cut cycle, potentially making the current high-yield environment one of the last opportunities for investors to lock in one-year Treasury bill returns above 17%.
The CBN’s decision to raise the benchmark rate despite record demand therefore signals that the apex bank remains focused on its liquidity and monetary policy objectives, even as expectations of monetary easing gain traction.
