The Central Bank of Nigeria achieved an oversubscription rate of approximately 199 percent during its Nigerian Treasury Bills primary market auction on Wednesday, as investors actively sought high returns, with total subscriptions reaching N3.44tn compared to an offering of N1.15tn.
The demand level, approximately three times the available supply, represented the highest performance since December 4, 2024, when offers exceeded N5tn amid a time of high inflation and significantly increased interest rates.
The outcomes of the auction held on January 21, 2026, indicated that although there was significant demand, the central bank managed to sell only N1.06tn in bills across the 91-day, 182-day, and 364-day maturities, resulting in approximately N2.38tn in unsatisfied bids.
The limited allocation indicated the CBN’s ongoing inclination towards strict liquidity conditions while it manages government financing requirements alongside inflation and currency exchange challenges. Investor interest was significantly focused on the longer end of the yield curve, supporting the notion that interest rates could be approaching their highest point.
Although the 91-day bill received subscriptions of N46.13bn compared to a proposed amount of N150bn, with N40.61bn allocated at a maximum rate of 15.84 per cent, the 182-day bill saw bids totaling N46.51bn against a N200bn offering, with N42.16bn sold at 16.65 per cent.
The 364-day bill was the main focus of the auction, receiving N3.35tn in applications compared to an offering of N800bn, resulting in an oversubscription level of over 318 per cent for this maturity, with the CBN distributing N977.68bn at a stop rate of 18.36 per cent.
Actual yield fluctuations indicated continued scarcity in system liquidity. The 91-day actual yield climbed to 16.50 percent, whereas the 182-day one went up to 18.17 percent from 17.99 percent in the last auction.
Despite the 364-day actual return decreasing slightly to 22.49 percent from 22.65 percent, it still stayed well above 22 percent, making the one-year instrument the most appealing choice for investors looking for higher returns.
Experts noted that the level of oversubscription indicated a merging of fiscal and monetary factors. Given the 2026 fiscal year’s forecasted deficit of N23.85tn and the continued high cost of external borrowing, the Federal Government has relied more significantly on the domestic market.
The initial quarter’s issuance schedule aims to raise N7.55tn in loans, boosting the availability of short-term government securities and creating upward pressure on interest rates as the country competes for local funds.
At the same time, the central bank has kept rates high as part of its approach to combat inflation. By maintaining appealing returns, especially on the one-year bill, the CBN aims to absorb surplus liquidity, stabilize inflation expectations, and attract foreign portfolio investments to strengthen the naira.
The choice to provide fewer than full subscriptions indicates a conscious attempt to prevent easing financial conditions too soon.
The lead economist at CardinalStone, Olaolu Boboye, stated that yields are expected to stay high in the short term, with one-year Treasury Bills projected to fluctuate between 18.0 and 20.0 percent. “In general, we recommend fund managers to focus on the short to medium part of the yield curve, particularly in H1’26,” he mentioned.
A fixed-income analyst at Meristem Securities, Matilda Adefalujo, stated that the government is expected to maintain rates in a way that remains appealing to ensure continued active involvement in auctions.
Provided by SyndiGate Media Inc.Syndigate.info).
