The Debt Management Office (DMO) rejected bids worth N1.84 trillion at Wednesday’s Treasury bills auction, allotting just N71.16 billion out of N800 billion offered as stop rates declined across all three maturities.
The outcome signals renewed downward pressure on primary-market borrowing rates, supported by elevated banking system liquidity and falling secondary-market yields.
At the auction conducted by the Central Bank of Nigeria (CBN) on behalf of the Federal Government on October 28, total subscriptions rose to N1.91 trillion from N1.03 trillion at the previous auction on October 14, representing a bid-to-cover ratio of 2.38 times, compared with 2.29 times previously.
However, the DMO allotted only N71.16 billion, about nine percent of the amount offered, rejecting approximately 96 percent of total bids.
The latest auction followed an increase in the offer size to N800 billion from N450 billion at the previous auction. The offer for the 364-day bill rose to N600 billion from N350 billion, while the 91-day and 182-day offers increased to N100 billion each from N50 billion.
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Stop rates declined across all three maturities. The 91-day rate fell by 10 basis points to 15.40 percent, the 182-day rate eased by one basis point to 15.79 percent, while the 364-day rate dropped by 10 basis points to 15.80 percent.
The decline in the one-year stop rate reversed the five-basis-point increase recorded at the previous auction, suggesting a resumption of the bullish momentum in the primary market following the September monetary policy easing.
Investor demand remained heavily concentrated in the 364-day Treasury bill, which attracted subscriptions of N1.84 trillion against an offer of N600 billion, translating to a bid-to-cover ratio of 3.06 times, up from 2.81 times at the previous auction.
Despite the strong demand, the DMO allotted only N38.38 billion for the tenor, accepting approximately two percent of subscriptions. Bids ranged as high as 18.24 percent, highlighting the wide difference between some investors’ yield expectations and the rate ultimately accepted.
Demand at the shorter end of the curve remained weak. The 91-day bill attracted N51.56 billion in subscriptions against N100 billion offered, while the 182-day bill recorded N20.27 billion against the same offer size.
The DMO allotted N22.33 billion and N10.45 billion for the 91-day and 182-day bills, respectively, accepting about 43 percent and 52 percent of subscriptions at the two tenors.
The auction outcome came amid an increase in banking system liquidity, which rose to N8.59 trillion from N6.94 trillion at the close of the previous week, supported largely by open market operations (OMO) maturities of N2.13 trillion.
This occurred despite the CBN’s OMO auction on October 22, where it sold N2.63 trillion across the 138-day and 180-day tenors against an offer of N2 trillion. The stop rates at the OMO auction were 17.63 percent and 17.14 percent, respectively, remaining above the latest Treasury bills stop rates.
Secondary-market yields also declined ahead of the auction. The average Treasury bills yield fell by 75 basis points to 17.47 percent on October 27 from 18.21 percent on October 14.
The six-month benchmark yield recorded the steepest decline, dropping by 166 basis points to 16.63 percent, while the one-month yield fell by 100 basis points to 16.68 percent. The nine-month and three-month yields declined by 79 basis points to 18.33 percent and 55 basis points to 17.08 percent, respectively.
In contrast, the 12-month benchmark yield rose by 26 basis points to 18.61 percent, indicating a divergence between primary and secondary-market pricing at the longer end of the yield curve.
The combination of elevated system liquidity and declining secondary-market yields supported demand at the auction, giving the DMO room to accept bids at lower rates while allotting substantially less than the amount offered.
Across the three Treasury bills auctions held so far in the fourth quarter of 2026, the DMO has raised about N1.31 trillion against N2.15 trillion offered, reflecting the relatively low allotments recorded during the period.
Going forward, the direction of Treasury bills yields will depend on system liquidity conditions, the scale of the CBN’s OMO issuances and the DMO’s pricing decisions at subsequent auctions. OMO rates, which remain above Treasury bills rates, will also influence investors’ choices between the two instruments.
Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.
