Nigerian Treasury Bills at the Wednesday, November 19, 2025 auction, attracted N1.23 trillion subscriptions for the 364-day tenor against a N450 billion offer, underlining a clear strategy to lock in high yields ahead of anticipated monetary policy easing in 2026.
Despite this aggressive bidding posture, stop rates across the 91-day, 182-day and 364-day papers stayed unchanged at 15.30%, 15.50% and 16.04% respectively.
The Central Bank of Nigeria (CBN) allotted N1.03 trillion for the 364-day, N33.81 billion (91-day) and N26.41 billion (182-day), with a total allotment of N1.63 trillion, highlighting excess liquidity across the system.
True yields remained attractive at 15.918% (91-day), 16.809% (182-day) and 19.104% (364-day).
Financial analysts expressed surprise as rates remained unchanged despite massive demand, noting that the auction outcome suggests the yield peak may have been reached.
“Investors continue to lock in the higher yields ahead of expected interest-rate moderation in 2026,” stated Dr. Ayodeji Ebo, CEO of Optimus by Afrinvest Limited.
Comparison with November 5 Auction: Demand intensifies on longer tenors
While the November 5 auction drew total bids of N1.18 trillion across all tenors, the November 19 sale exceeded that performance on the 364-day paper alone, signalling intensified positioning into longer maturities.
On November 5, N1.135 trillion chased the long-dated paper, slightly lower than the N1.23 trillion recorded on November 19.
The earlier issuance saw stop rates marginally soften by 10 basis points from 16.14% to 16.04%, in contrast to the full rate retention at the most recent auction, leaving operators speculating about yield stabilisation despite moderating inflation.
Financial analyst, Kalu Aja, quipped: “Stop rates are unchanged even as inflation is crashing. The market is passing a verdict.”
Liquidity or inflation outlook driving strategy?
Analysts had expected that the intensifying demand tied to excess liquidity, limited alternative asset options, sharply declining inflation, and strengthening expectations for early 2026 policy rebalancing would have triggered rates cut.
The CBN’s recent liquidity easing and improving reserve buffers have further boosted investor sentiment, with analysts forecasting rates easing across tenors and fixed income asset classes. Yet, the CBN left rates unchanged.
According to another Lagos-based fixed-income trader: “The flat rate structure suggests short-term yield stability, with only marginal softening likely if liquidity remains elevated.”
Market watchers expect bidding competition to remain fierce into December as institutional balance sheet adjustments and portfolio repositioning accelerate ahead of Q1 2026 policy actions.
Outlook: Rate softening likely as inflation slows further
With two consecutive auctions crossing the N1 trillion subscription levels for 365 Bill alone, analysts predict stronger participation in upcoming rounds by investors seeking to lock in returns before rates soften in 2026.
The yield environment is expected to remain stable short-term but could ease as inflation sustains its downward trend at 16.05% in October, down from 18.02% in September.
For now, Nigeria’s one-year treasury bills — delivering over 19% true returns — remain the most preferred risk-free instrument for capital preservation and enhancement as investors move to lock in yields before the cycle turns.
