The Central Bank of Nigeria (CBN) will today conduct its second Treasury Bills (T-bills) auction for January 2026, offering instruments worth N1.15 trillion amid elevated system liquidity and mixed expectations on the future direction of interest rates.
The auction, which spans the standard 91-day, 182-day and 364-day maturities, underscores the apex bank’s continued reliance on short-term domestic borrowing to fund government obligations and manage liquidity conditions in the financial system.
Market watchers say investor participation will largely be shaped by inflation trends, recent monetary policy signals and the CBN’s liquidity management stance, with the auction outcome expected to provide fresh clues on the near-term trajectory of short-term interest rates.
Offer structure signals investor preference
According to details contained in the CBN’s offer circular, N150 billion has been allotted to the 91-day bills, N200 billion to the 182-day tenor, while the bulk of the issuance—N800 billion—will be offered on the 364-day bills.
Analysts note that the heavy concentration on one-year bills reflects both the government’s funding strategy and investors’ preference for longer-dated securities that provide relatively higher yields and better return visibility in an uncertain rate environment.
Recent auctions have shown consistently stronger demand at the long end of the curve, as institutional investors seek to lock in yields amid lingering concerns over inflation sustainability and monetary tightening.
Rates remain firm despite easing inflation
Spot rates are widely expected to remain under upward pressure, extending the trend seen in the final quarter of 2025, when yields rose even as inflation showed signs of moderation.
In December, the stop rate on 91-day bills increased to 15.80 per cent from 15.50 per cent, while 182-day bills rose to 16.50 per cent from 15.95 per cent. The 364-day bills closed at 18.47 per cent, up from 17.51 per cent, reinforcing market expectations of firm yields across the curve.
Market analysts attribute this trend to lingering fears of inflation reversals, exchange rate risks and the CBN’s preference for maintaining tight monetary conditions to safeguard macroeconomic stability.
Secondary market subdued
Meanwhile, activity in the secondary Treasury bills market has remained largely muted, with trading oscillating between calm and mildly bearish amid cautious investor positioning, despite ample liquidity in the banking system.
Most maturities closed flat ahead of the primary auction and following a recent Open Market Operations (OMO) sale. Only the 09-Apr-26 and 07-Jan-27 papers recorded yield movements, rising by 58 basis points and 12 basis points, respectively.
Earlier, the CBN allotted N2.64 trillion across 203-day and 245-day OMO instruments at stop rates of 19.38 per cent and 19.39 per cent. Subsequently, the average Treasury bill yield edged up by four basis points to 18.14 per cent, reflecting negative sentiment driven by selloffs in the secondary market.
Analysts say today’s auction will be closely watched for signals on the CBN’s next steps, particularly as the market balances disinflation hopes against sustained government borrowing needs.
