The Central Bank of Nigeria (CBN) raised the stop rate on its benchmark 364-day Treasury Bill to 17.59% at Wednesday’s auction, despite overwhelming demand that had raised expectations of lower borrowing costs.
Investors submitted a combined N4.4 trillion in bids across the three tenors offered, against N700 billion advertised, according to auction results obtained on Wednesday, August 12, 2026.
The rate increase marks a reversal from the previous auction on July 29, when the CBN cut the one-year stop rate by 31 basis points despite subscriptions reaching nearly seven times the amount offered.
At Wednesday’s auction, subscriptions for the 364-day bill alone reached N4.19 trillion, more than eight times the N500 billion offered.
Despite the strong demand, the apex bank raised the clearing rate by 24 basis points from 17.35% to 17.59%.
The CBN allotted N1.26 trillion through the 364-day instrument, exceeding the advertised amount by N760 billion.
The 182-day Treasury Bill had N100 billion on offer but attracted N63.97 billion in subscriptions, with N47.48 billion allotted. Its stop rate remained unchanged at 16.50%.
Similarly, the 91-day bill attracted N162.21 billion in subscriptions against N100 billion offered, while N148.57 billion was allotted. Its stop rate was maintained at 16.30%.
The bills have maturity dates of November 12, 2026, February 11, 2027, and August 12, 2027, for the 91-day, 182-day and 364-day instruments, respectively.
The scale of demand for the 364-day bill would ordinarily give the CBN room to clear bids at a lower or unchanged rate. This was the approach taken at the July 29 auction, when nearly sevenfold oversubscription was accompanied by a 31-basis-point rate reduction.
However, Wednesday’s outcome suggests that the CBN remains willing to maintain elevated borrowing costs despite substantial liquidity in the financial system.
The auction forms part of the CBN’s Q3 2026 Nigerian Treasury Bills issuance programme, which targets N5.8 trillion in gross issuance between July and September. The programme is partly aimed at supporting financing for the Federal Government’s projected N29.20 trillion fiscal deficit.
The August 12 auction was also the second consecutive large-offer auction, following July 8 and July 29, in which the 364-day Treasury Bill cleared above 17%.
At the July 15 auction, the CBN allotted N1.19 trillion after investors submitted N2.87 trillion in bids for the 364-day bill, with the stop rate easing by four basis points.
At the July 8 auction, the apex bank allotted N1.06 trillion and increased the one-year rate to 17.70%.
By July 29, the CBN allotted N1.25 trillion as subscriptions reached N3.38 trillion, while the stop rate fell by 31 basis points.
Wednesday’s increase therefore reverses the recent easing trend in one-year Treasury Bill yields, despite demand rising to N4.19 trillion.
The auction also follows a period of significant liquidity inflows into the banking system.
A reported N2.48 trillion OMO repayment settled on August 11, contributing to a broader N5.21 trillion net liquidity injection into the financial system over the preceding week.
The substantial liquidity would ordinarily be expected to put downward pressure on Treasury Bill yields as banks and other investors compete to deploy available funds.
However, the CBN’s decision to increase the 364-day stop rate suggests that the auction may also be serving as a liquidity management and sterilisation tool rather than solely as a government funding exercise.
In July, the CBN mopped up N7.2 trillion through Open Market Operations sales, pushing cumulative 2026 sterilisation above N50 trillion.
Analysts expect the first CBN rate cut at the September Monetary Policy Committee meeting, raising expectations that current Treasury Bill yields could represent one of the final opportunities for investors to lock in returns above 17% on the one-year instrument.
The latest auction complicates expectations in Nigeria’s fixed-income market, where declining stop rates and strong demand had fuelled expectations of a gradual downward movement in yields ahead of the anticipated September rate cut.
