Investor appetite surged at the Central Bank of Nigeria’s (CBN) Nigerian Treasury Bills primary market auction on Wednesday, with total subscriptions jumping to ₦3.44 trillion. The demand was far above the amount on offer and marked the strongest turnout since December 2024, as investors moved quickly to lock in elevated returns in a high-rate environment.
At the auction, the CBN offered ₦1.15 trillion across three maturities: ₦150 billion for the 91-day bill, ₦200 billion for the 182-day bill, and ₦800 billion for the 364-day bill. Demand was most intense at the long end of the curve, where bids for the one-year instrument reportedly came in at about four times the offer size. Despite the oversubscription, the apex bank allotted ₦1.06 trillion across the three tenors.
A return to peak demand conditions
The last comparable spike in demand was recorded on December 4, 2024, when subscriptions exceeded ₦5 trillion during a period of heightened inflation concerns and elevated interest rates. More recently, participation has remained consistently strong, with total subscriptions staying above ₦1 trillion at primary auctions since December 2025.
Analysts at Meristem have linked the sustained appetite to investors positioning for higher rates and prioritising attractive fixed-income returns.
Yield outcome: mixed, but still elevated
Yields at the latest auction were mixed. Short-dated bills recorded modest increases, reflecting persistent demand for near-term cash parking and frequent rollovers. The true yield on the 91-day bill rose to 16.50%, while the 182-day bill climbed to 18.17% from 17.99% at the previous auction.
In contrast, the true yield on the 364-day bill eased slightly to 22.49% from 22.65%. Even with the decline, the one-year paper remained firmly elevated and continued to anchor demand, signalling that many investors still see value in locking in returns above 22% for a longer period.
Why Treasury Bills are pulling in so much money
The demand surge is not happening in a vacuum. Nigeria’s fiscal financing needs remain heavy, and domestic markets are increasingly central to government borrowing plans. The 2026 fiscal year is projected to post a budget deficit of ₦23.85 trillion, pushing the Federal Government to rely more on domestic funding as international borrowing remains expensive for many emerging economies.
That pressure is evident in the Q1 2026 issuance calendar, which signals planned borrowing of ₦7.55 trillion in the first three months of the year. In markets, higher supply typically competes for the same pool of liquidity, helping keep yields elevated as government securities expand in volume and frequency.
The CBN’s strategy: inflation, liquidity control, and FX support
Beyond fiscal financing, the CBN’s rate posture also supports strong Treasury Bills demand. With inflation management and exchange-rate stability still key priorities, keeping yields attractive,especially on the one-year instrument above 22%,helps the CBN mop up excess naira liquidity and make local fixed-income assets more compelling.
In theory, higher risk-free yields can also encourage portfolio inflows by improving relative returns, which may help strengthen foreign exchange supply and reduce pressure on the naira, especially during periods of tight dollar liquidity.
What this means for investors and the market in 2026
The scale of subscriptions suggests investors expect elevated yields to persist, at least in the near term. It also reflects a clear preference for longer-dated instruments when rates are attractive, even if shorter tenors remain useful for liquidity management.
For the broader market, heavy government issuance alongside CBN liquidity tightening typically means yields may remain elevated until inflation trends improve materially or fiscal financing pressures ease.
The direction of interest rates, inflation prints, the naira’s performance, and investor liquidity conditions will likely determine whether the next auctions sustain similar oversubscription levels.
