The Central Bank of Nigeria (CBN) recorded an oversubscription rate of about 199 per cent at its Nigerian Treasury Bills (NTBs) primary market auction held on Wednesday, as investors aggressively positioned for high yields.
Total subscriptions rose to N3.44tn against an offer of N1.15tn, reflecting demand roughly three times the amount on offer. The strong showing marked the highest level of demand since December 4, 2024, when bids exceeded N5tn during a period of peak inflation and sharply elevated interest rates.
Despite the heavy interest, results of the January 21, 2026, auction showed that the apex bank sold only N1.06tn worth of bills across the 91-day, 182-day, and 364-day tenors. This left about N2.38tn in unmet bids.
Analysts said the restrained allotment signalled the CBN’s continued preference for tight liquidity conditions as it balances government funding needs against inflationary and exchange-rate pressures.
Investor appetite was heavily skewed towards the long end of the curve, reinforcing expectations that interest rates may be close to their peak. While the 91-day bill recorded subscriptions of N46.13bn against an offer of N150bn, the CBN allotted N40.61bn at a stop rate of 15.84 per cent.
The 182-day bill attracted N46.51bn in bids versus a N200bn offer, with N42.16bn sold at a stop rate of 16.65 per cent.
The 364-day bill dominated the auction, drawing N3.35tn in subscriptions against an offer of N800bn. This translated to an oversubscription rate of more than 318 per cent for that tenor alone, with the CBN allotting N977.68bn at a stop rate of 18.36 per cent.
True yield movements pointed to sustained tightness in system liquidity. The 91-day true yield rose to 16.50 per cent, while the 182-day increased to 18.17 per cent from 17.99 per cent at the previous auction. Although the 364-day true yield eased marginally to 22.49 per cent from 22.65 per cent, it remained firmly above 22 per cent, keeping the one-year paper the most attractive option for yield-seeking investors.
Analysts attributed the scale of oversubscription to a convergence of fiscal and monetary pressures. With the 2026 fiscal year projecting a deficit of N23.85tn and external borrowing conditions remaining expensive, the Federal Government has leaned more heavily on the domestic market.
The first-quarter issuance calendar alone targets N7.55tn in borrowing, increasing the supply of short-term government paper and exerting upward pressure on yields as the sovereign competes for domestic liquidity.
At the same time, the CBN has allowed rates to remain elevated as part of its inflation-fighting strategy. By sustaining attractive yields, particularly on the one-year bill, the apex bank aims to mop up excess liquidity, anchor inflation expectations, and attract foreign portfolio inflows to support the naira.
The decision to allot far less than total subscriptions, analysts said, suggests a deliberate effort to avoid loosening financial conditions prematurely.
Lead economist at CardinalStone, Olaolu Boboye, said yields are likely to remain elevated in the near term, with one-year Treasury Bills expected to trade between 18.0 and 20.0 per cent. “Overall, we advise fund managers to play at the short to mid segment of the curve, especially in H1’26,” he said.
A fixed-income analyst at Meristem Securities, Matilda Adefalujo, added that the government was likely to keep rates relatively attractive to sustain strong participation at future auctions.
