The Debt Management Office (DMO) rejected approximately 74% of N1.032 trillion total subscriptions, accepting only N269.06 billion – about 26.07% of the bids received at the October 14 auctions of Nigerian Treasury Bills (NTBs).
For the one-year bill, DMO allotted N220 billion of the N982.21 billion subscribed, as the stop rate rose five basis points to 15.90% from 15.85%, its first increase since August.
This is according to the Treasury bill auction results released by the Central Bank of Nigeria (CBN), which conducted the auction on behalf of the Federal Government, and analysis by the Financial Markets Dealers Association (FMDA).
The CBN offered N450 billion across three tenors, compared with N900 billion at the October 7 auction, while total subscriptions reached N1.032 trillion, allotments stood at N269.06 billion, approximately 40% below the advertised offer.
DMO allots just 22% of bids:
Demand at the auction was concentrated in the 364-day Treasury bill, which attracted 95.15% of total subscriptions. Investors submitted N982.21 billion in bids for the one-year instrument against an advertised offer of N350 billion.
However, the DMO allotted only N220 billion, representing approximately 22.4% of subscriptions and 62.9% of the amount offered.
- The 364-day bill attracted subscriptions equivalent to 2.81 times its N350 billion offer, with the stop rate increasing to 15.90%.
- The 182-day bill received N30.10 billion in bids against N50 billion offered, with N29.54 billion allotted at an unchanged 15.80%.
- The 91-day bill attracted N19.91 billion against N50 billion offered, with N19.52 billion allotted at an unchanged 15.50%.
- Total subscriptions were 2.29 times the N450 billion offer, compared with 1.97 times at the October 7 auction.
Approximately N763 billion in bids was not allotted, with nearly all the unallotted subscriptions concentrated in the one-year tenor.
Bids for the 364-day bill ranged from 15.00% to 18.18%, placing the accepted stop rate 228 basis points below the highest bid. FMDA interpreted the restricted allotment as an attempt to resist upward pressure on borrowing rates, although the auction results did not explain why individual bids were rejected.
Treasury Bill Rates reverse decline:
The five-basis-point increase in the one-year stop rate interrupted a downward trend that had continued since August. Nairametrics previously reported that the 364-day rate reached 17.59% on August 12 before declining through subsequent auctions.
- The decline continued after the CBN’s Monetary Policy Committee reduced the benchmark interest rate by 350 basis points to 23% on September 22.
- The 364-day stop rate fell to 15.89% at the September 23 auction.
- At the October 7 auction, the rate declined further to 15.85%, while the DMO allotted N968.47 billion against N900 billion offered.
- Investors had bid N1.683 trillion for the one-year bill on October 7, compared with N982.21 billion at the latest auction.
The CBN allotted N8.14 trillion in Treasury bills during Q3 2026, exceeding its N5.80 trillion target by 40.34%.
Although total subscriptions declined by approximately 42% between the October 7 and October 14 auctions, demand remained concentrated in the longest tenor.
The latest results also showed CBN-reported true yields of 16.14%, 17.16% and 18.91% for the 91-day, 182-day and 364-day bills, respectively. The increase in the one-year stop rate was modest, but it marked the first reversal of the recent decline in primary-market pricing.
DMO limits borrowing amid liquidity:
Banking system liquidity increased to N6.30 trillion from N3.71 trillion in the week preceding the auction, supported by approximately N2.41 trillion in OMO maturities, according to FMDA. Despite the improvement, yields in parts of the secondary Treasury bill market increased.
FMDA reported that the average secondary-market Treasury bill yield rose 22 basis points to 17.86% on October 13, ahead of the auction.
- The 12-month secondary-market yield increased 61 basis points to 18.38%, while the one-month yield rose 94 basis points to 17.75%.
- The three-month and six-month yields declined by 49 and 11 basis points, respectively.
- The N269.06 billion allotted exceeded the N80.84 billion in Treasury bills scheduled to mature, implying a net increase of approximately N188.22 billion in outstanding face value.
The 364-day auction stop rate of 15.90% exceeded the 15.75% secondary-market close cited in the auction table, although the measures may use different pricing conventions.
Analysts at FMDA viewed the smaller allotment as evidence of the DMO’s effort to moderate borrowing without accepting substantially higher rates.
The wide range of submitted bids also indicates differences between the rates investors sought and the level at which the government was prepared to allot bills. The next auction will show whether the DMO maintains its restrained allotment approach and whether the upward movement in one-year stop rates continues