CBN cuts one-year T-bill rate by 44bps as N3.63 trillion bids chase N500 billion offer

At the primary market auction on Wednesday, August 26, 2026, the Central Bank of Nigeria (CBN) cut the one-year stop rate by 44 basis points to 17.15%, a sharp contrast with a rate hike of 364-day bill to 17.59% in previous Treasury Bills auction despite huge demand as reported by Nairametrics.

The rate cut followed overwhelming demand where investors poured a massive N3.63 trillion into the 364-day, more than seven times the N500 billion offered. However, rates on the shorter tenors remained unchanged.

Total subscriptions across the three tenors reached approximately N3.79 trillion against the N700 billion offered, translating to an overall subscription level of about 5.4 times.

However, the strong headline demand was almost entirely driven by the one-year instrument, which accounted for about 95.9% of total subscriptions, while the 182-day bill was significantly undersubscribed.

The CBN ultimately allotted approximately N762.89 billion across the three maturities, about N62.89 billion above the amount originally offered.

What the data is saying:

The CBN offered a combined N700 billion across the three maturities, comprising N100 billion each for the 91-day and 182-day bills and N500 billion for the 364-day instrument.

91-day bill

• Offer: N100 billion
• Subscription: N103.32 billion
• Allotment: N89.10 billion
• Stop rate: 16.30% (unchanged)
• Secondary-market yield: 17.45%

The 91-day bill recorded only modest oversubscription, with investors bidding about 1.03 times the amount offered. However, the CBN allotted only N89.10 billion, equivalent to about 89.1% of the original offer. The stop rate remained unchanged at 16.30%.

182-day bill

• Offer: N100 billion
• Subscription: N52.93 billion
• Allotment: N35.59 billion
• Stop rate: 16.50% (unchanged)
• Secondary-market yield: 17.05%

The six-month bill recorded the weakest demand at the auction, attracting only N52.93 billion against the N100 billion offered

This means that the instrument was undersubscribed, with demand covering just 52.9% of the amount offered.

The CBN ultimately allotted N35.59 billion, or about 35.6% of the initial offer, while the stop rate remained unchanged at 16.50%.

364-day bill

• Offer: N500 billion
• Subscription: N3.63 trillion
• Allotment: N638.19 billion
• Stop rate: 17.15%
• Previous stop rate: 17.59%
• Secondary-market yield: 17.24%

The one-year bill attracted approximately N3.63 trillion in subscriptions against the N500 billion offered.

This represents a subscription level of about 7.26 times the amount offered.

The CBN allotted N638.19 billion, exceeding the initial offer by approximately N138.19 billion, or 27.6%.

However, only about 17.6% of the total amount investors bid for was ultimately allotted.

The stop rate fell by 44 basis points to 17.15% from 17.59% at the previous auction, as investors showed strong willingness to accept lower yields to secure the longer-dated instrument.

More insights:

Demand at the August 26 auction was overwhelmingly concentrated on the 364-day bill. Out of approximately N3.79 trillion in total subscriptions:

• The 364-day bill accounted for about 95.9%
• The 91-day bill accounted for about 2.7%
• The 182-day bill accounted for about 1.4%

This means roughly N96 out of every N100 submitted by investors at the auction went into the one-year instrument.

The figures highlight a strong investor preference for locking funds into the 364-day bill rather than taking exposure to the shorter three-month and six-month maturities.

Investors submitted bids for the one-year bill at rates ranging from 16.00% to 19.05%, but the CBN stopped at 17.15%, allowing it to reject higher-cost bids.

The decline in the 364-day stop rate suggests the government gained stronger pricing power at the long end of the Treasury Bills curve, and investors are willing to accept lower yields. In other words, the intense demand contributed to a 44-basis-point decline in the stop rate to 17.15% from 17.59% at the previous auction.

Experts weigh-in

The intense demand comes at a time when policymakers are facing growing calls to allow interest rates and government borrowing costs to moderate further. Economists and market experts said the strong demand for the one-year Treasury Bill and the declining stop rate strengthen the case for a moderation in interest rates.

Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE) and former Director-General of the Lagos Chamber of Commerce and Industry (LCCI), said persistently high interest rates are increasingly diverting capital away from productive sectors.

• “Capital in the form of Foreign Portfolio Investments, also known as hot money, is gravitating towards financial assets rather than productive assets,” Yusuf said.
• “Hot money can stabilize an economy temporarily; productive investment is what transforms it permanently.”

According to Yusuf, the current interest-rate environment is becoming increasingly restrictive for businesses and productive investment, with high borrowing costs limiting companies’ ability to expand operations, invest in productive capacity and create jobs.

He added that although monetary tightening has helped moderate inflation and stabilise the foreign exchange market, there is a risk that the economic costs of maintaining restrictive rates for an extended period could begin to outweigh the benefits.

The CPPE CEO also noted that high debt-servicing costs are consuming an increasing share of government revenue, reducing fiscal space for investments in infrastructure, healthcare, education and other growth-enhancing sectors.

• “The challenge before policymakers is no longer merely one of economic stabilisation; it is increasingly one of inclusive prosperity,” Yusuf said.

Tajudeen Olayinka, CEO of Wyoming Capital Partners Limited, cited FMDQ’s recent report of strong FX inflows into the Nigerian market which appear to be largely driven by foreign investors as strong evidence supporting the case for a gradual decline in interest rates.

• “They (foreign portfolio investors) are bringing in so much Dollars, and that speaks to the fact that CBN should then allow the interest rate to moderate,” Olayinka said.
• “When that is happening, interest rate should moderate. Interest rate decline is supposed to follow suit,” he said.

According to Olayinka, if local demand does not fully absorb the strong supply of foreign exchange, the CBN may need to play a counterbalancing role to prevent an unsustainable appreciation of the naira.

• “At any point in time, somebody must play that counterbalance role in order not to allow unsustainable naira acquisition,” he said.

The investment expert argued that a sustained moderation in the exchange rate should ideally be accompanied by lower interest rates, warning that allowing the naira to strengthen without a corresponding adjustment in rates could create structural imbalances.

What you should know:

The final cumulative allotment for August 12 and August 26 Treasury Bills auctions capped at N2.218 trillion, the CBN having allotted N1.456 trillion in August 12 auction. This is well beyond advertised total offer amount of N1.4 trillion.

The stop rates at secondary market, when compared with the August 26 auction yields show that primary-market rates remained below secondary-market yields across all three tenors:

• 91-day: 16.30% at auction versus 17.45% in the secondary market
• 182-day: 16.50% versus 17.05%
• 364-day: 17.15% versus 17.24%

The smallest gap was recorded at the one-year end, where the auction rate was just 9 basis points below the secondary-market yield.

The result suggests that abundant demand for longer-dated Treasury Bills could continue to support a gradual moderation in the government’s short-term borrowing costs if the strong appetite persists.