The Debt Management Office rejected N763bn worth of bids at Nigeria’s latest Treasury bills auction, accepting only N269.06bn out of N1.032tn submitted by investors as the government raised the one-year borrowing rate for the first time since August.
The 364-day T-bill stop rate increased to 15.90 per cent from 15.85 per cent at the 7 October auction, ending a gradual decline in yields that followed the Central Bank of Nigeria’s September interest rate cut.
The auction, conducted by the CBN on behalf of the Federal Government on 14 October, saw the DMO accept approximately 26.1 per cent of total subscriptions, despite investors submitting bids worth more than twice the amount offered.
According to the auction results released by the CBN and analysed by the Financial Markets Dealers Association, the government offered N450bn across the 91-day, 182-day and 364-day instruments, compared with N900bn at the previous auction.
Total allotments amounted to N269.06bn, significantly below the advertised offer, indicating that the government borrowed less than the amount it made available to investors.
The 364-day instrument accounted for the overwhelming majority of investor demand, attracting N982.21bn or about 95.2 per cent of total subscriptions.
However, the DMO allotted only N220bn, representing approximately 22.4 per cent of the bids received for the instrument and 62.9 per cent of the advertised N350bn offer.
Investors submitted bids at rates ranging from 15.00 per cent to 18.18 per cent, while the government settled at a stop rate of 15.90 per cent.
The 182-day bill attracted N30.10bn in subscriptions against an offer of N50bn. The DMO allotted N29.54bn at an unchanged rate of 15.80 per cent.
For the 91-day instrument, subscriptions stood at N19.91bn against N50bn offered, with N19.52bn allotted at 15.50 per cent.
Overall, subscriptions were approximately 2.29 times the amount offered, compared with 1.97 times at the 7 October auction.
The substantial gap between bids and allotments suggests that the government was selective about the volume of borrowing it was willing to undertake at the rates demanded by investors. However, the auction results did not specify the reasons individual bids were rejected.
The increase in the one-year stop rate marks a reversal of the decline recorded over the preceding auctions.
The 364-day rate had climbed to 17.59 per cent on 12 August before easing to 15.89 per cent at the 23 September auction and 15.85 per cent on 7 October.
The decline followed the CBN’s decision on 22 September to reduce its benchmark interest rate by 350 basis points to 23 per cent.
At the 7 October auction, investors had submitted N1.683tn in bids for the one-year instrument. Demand fell to N982.21bn at the latest auction, a decline of about 41.6 per cent.
Despite the reduction, the 364-day bill continued to attract the strongest demand among the three tenors, reflecting investors’ preference for locking in returns over a longer period.
The CBN allotted N8.14tn in T-bills during the third quarter of 2026, exceeding its N5.80tn target by 40.3 per cent.
The latest auction took place against a backdrop of improving banking system liquidity and rising yields in parts of the secondary T-bills market.
The DMO allotted N269.06bn at the latest auction, compared with N80.84bn in T-bills scheduled to mature. Based on these figures, the auction implies a net increase of approximately N188.22bn in outstanding face value.
The restrained allotment also meant the government raised substantially less than the N450bn advertised, despite receiving more than N1tn in bids.
“As an investor, I know that the higher one-year stop rate offers a marginally improved return on newly purchased T-bills. For the government, however, accepting higher rates on a larger volume of borrowing could increase financing cost,” said a Lagos-based fixed income analyst, Ismail Adu.