Final Q3 auction comes amid falling short-term yields and strong demand for government securities…..
The Central Bank of Nigeria (CBN), acting on behalf of the Debt Management Office (DMO), is set to offer N500 billion worth of Nigerian Treasury Bills (NTBs) to banks and investors on Wednesday, September 23, as the government’s third-quarter borrowing programme draws to a close.
The auction will be the final Treasury Bills sale for the third quarter of 2026, with the CBN directing Money Market Dealers to submit their bids through its S4 Web Interface between 8:00 a.m. and 11:00 a.m. on the auction date.
The bills on offer are spread across three maturity periods, with the largest portion allocated to the one-year instrument.
The breakdown is as follows:
91-day bill: N100 billion
182-day bill: N100 billion
364-day bill: N300 billion
Total: N500 billion
Successful bidders are expected to receive their allotment letters on Thursday, September 24, with payment for successful bids due into their CBN accounts by 11:00 a.m. that day.
Dealers are allowed to submit multiple bids either for themselves, other authorised dealers or members of the public. Each bid must be in multiples of N1,000, with a minimum bid requirement of N50,001,000.
The CBN, however, retains the discretion to reject bids that do not meet its expectations and may adjust the amount offered depending on prevailing market conditions.
Final leg of N5.8tn Q3 programme
Wednesday’s auction brings to a close the CBN’s N5.8 trillion Treasury Bills issuance programme for the third quarter, which was significantly larger than the net issuance target recorded in the previous quarter.
The three-month and six-month instruments were each scheduled to account for N900 billion of the programme, while the 364-day bills made up the largest share at N4 trillion.
That means the one-year Treasury Bills accounted for roughly 69 per cent of the quarter’s planned issuance, reflecting the government’s heavier reliance on longer-dated short-term securities.
At the same time, about N2.64 trillion in Treasury Bills was scheduled to mature during the quarter. This included approximately N550.83 billion in 91-day bills, N503.19 billion in 182-day bills and N1.59 trillion in 364-day bills.
Based on those figures, the Q3 programme implied estimated net new borrowing of about N3.16 trillion after accounting for maturities.
The CBN has conducted a series of auctions throughout the quarter, with sales held on July 8, July 15, July 29, August 12, August 26, September 2 and September 9, ahead of the final September auction.
September sales already approach N2tn
The latest auction comes after two sizeable Treasury Bills sales earlier in September, with the CBN selling a combined N1.92 trillion worth of securities.
At the September 2 auction, the apex bank sold N865.71 billion, exceeding the N700 billion initially offered. The stop rate on the 364-day bill fell to 16.84 per cent.
A week later, the CBN again exceeded its advertised offer, selling N1.054 trillion against N750 billion on offer at the September 9 auction.
The 364-day bill stop rate dropped further to 16.62 per cent, marking another decline in borrowing costs for the government.
Combined, the two September auctions have generated about N1.92 trillion, meaning the final N500 billion offer could push September’s Treasury Bills sales beyond N2.4 trillion if the entire amount is allotted.
Treasury Bill yields continue to fall
The latest auction is taking place against a backdrop of declining Treasury Bills yields, particularly at the longer end of the short-term government securities market.
The 364-day NTB stop rate has fallen at successive auctions, dropping from 17.59 per cent on August 12 to 17.15 per cent on August 26, before declining to 16.84 per cent on September 2 and 16.62 per cent on September 9.
That represents a decline of almost one percentage point in roughly a month.
The movement has occurred despite continued strong investor appetite for government securities. Demand for the 364-day bills has repeatedly exceeded the amounts put up for sale, yet the CBN has continued to accept lower stop rates.
The trend also stands out because the CBN’s Monetary Policy Rate remains at 26.5 per cent, after the rate was left unchanged in July.
While the MPR remains the benchmark policy rate affecting broader borrowing conditions, the falling Treasury Bills yields indicate that short-term government borrowing costs have been easing in the secondary and primary markets.
Inflation gives CBN more room
The decline in Treasury Bills yields also comes as Nigeria’s inflation rate continues to moderate.
Headline inflation eased marginally to 15.39 per cent in August 2026, from 15.43 per cent in July, marking the third consecutive month of moderation.
The combination of easing inflation and declining short-term yields will be closely watched as the CBN’s Monetary Policy Committee meets on September 21 and 22 for its 307th meeting.
The outcome of the meeting could provide further direction for interest rates and the fixed-income market, particularly as investors assess whether the recent decline in Treasury Bills yields can continue.
Market expectations, however, have largely pointed towards the MPC maintaining the 26.5 per cent MPR, with analysts citing several factors that could encourage caution.
Among them are movements in international oil prices, with Brent crude recently trading above $100 per barrel, as well as concerns over potential fiscal and political spending pressures as Nigeria approaches another election cycle.
For investors, Wednesday’s N500 billion auction therefore comes at a closely watched point in the fixed-income market, with the outcome likely to provide another indication of where Treasury Bills yields are heading as the CBN closes out its Q3 issuance programme.
