The Central Bank of Nigeria (CBN) is expected to conduct today its second Treasury Bills (T-bills) auction for the month of January 2026, valued at N1.15 trillion, amid elevated system liquidity and mixed interest rate expectations.
The apex bank will open a total offer size of N1.15 trillion across the three standard maturities, 91 days, 182 days and 364 days, continuing its strategy of aggressive market funding through short-term domestic instruments.
The auction comes at a time when investors remain sensitive to inflation dynamics, monetary policy signals and liquidity management operations by the CBN.
Analysts note that the outcome of the auction will provide fresh guidance on the direction of short-term rates, particularly as the market navigates the interaction between disinflation concerns and sustained government borrowing needs.
What offer data reveal
Details from the CBN’s offer circular show that N150 billion has been earmarked for the 91-day bills, while N200 billion will be offered on the 182-day tenor. The largest tranche, N800 billion, will be allocated to the 364-day bills, reflecting persistent investor appetite for longer-dated securities that offer relatively higher yields.
Market operators say the heavy weighting toward one-year bills underscores both the government’s funding strategy and investors’ preference for locking in returns amid uncertainty over the future path of interest rates. The long-dated segment has consistently attracted stronger demand at recent auctions.
This structure also mirrors recent auction patterns, where the CBN has relied heavily on longer tenors to mop up liquidity while offering yields that remain attractive in real and nominal terms, especially for institutional investors.
Rates under pressure despite softer inflation prints
Spot rates are widely expected to edge higher again, extending the trend seen in the fourth quarter of 2025, when yields rose despite signs of easing inflation. Analysts attribute this to concerns around inflation reversals and the CBN’s continued preference for tighter monetary conditions.
In December, the stop rate on 91-day bills rose to 15.80% from 15.50%, while the 182-day bills climbed to 16.50% from 15.95%. One-year bills were sold at 18.47%, up from 17.51%, reinforcing expectations of firm yields across the curve.
The CBN had also stepped-up rates at previous auctions even as headline inflation softened in November, a move that signaled its cautious stance on inflation sustainability and exchange rate stability.
Secondary market trades calm as investors turn to auctions
Trading in the secondary Treasury bills market has continued to swing from calm to bearish, reflecting a cautious undertone amid light activity, despite ample liquidity in the banking system.
Most maturities closed flat as investors adopted a wait-and-see approach ahead of the primary auction and a recent Open Market Operations (OMO) sale.
Notably, only the 09-Apr-26 and 07-Jan-27 papers recorded yield movements, rising by 58 basis points and 12 basis points, respectively. Other tenors were largely unchanged, indicating subdued demand and selective positioning.
Earlier, the CBN allotted N2.64 trillion across 203-day and 245-day OMO papers at stop rates of 19.38% and 19.39%. Following this, the average Treasury bill yield edged up by four basis points to close at 18.14%, reflecting negative sentiment driven by selloffs in the secondary market.
Backstory
CBN raised a total of N1.144 trillion at its first NTB primary market auction of 2026, at higher stop rates across all maturities amid sustained investor demand.
At the January 7 auction, DMO raised N108.17 billion for the 91-day, N48.23 billion for the 182-day, and N987.78 billion for the 364-day maturities at higher rates, as investors repriced the risk-free assets across all maturities, particularly at the long end of the curve.
In contrast, yields on T-bills later declined to an average of 18.10% for the 364-day Bills at the secondary market, as investor demand for naira-denominated government assets strengthened ahead of the auction.
Trading activity remained largely subdued, with only marginal yield adjustments across most maturities. However, longer-dated bills due in January 2027 attracted stronger interest, pushing their yield down to 17.51%.
