The Federal Government of Nigeria successfully raised N968.47 billion through Treasury Bills on Wednesday, October 7, 2026. This was achieved through an auction conducted by the Debt Management Office (DMO) via the Central Bank of Nigeria. The auction drew significant interest from investors, with total subscriptions amounting to approximately N1.77 trillion across three maturities.
The one-year Treasury Bill, with a maturity of 364 days, was the most sought-after, attracting N1.68 trillion in bids against N700 billion offered. In response to the overwhelming demand, the DMO allotted N885 billion, surpassing the advertised amount by N185 billion. The stop rate for this tenor was set at 15.85 percent, down from 15.89 percent at the previous auction.
This latest rate represents a substantial decline of 1.85 percentage points from the 17.70 percent peak recorded on July 8, 2026. The sharp decrease in the cost of one-year government borrowing within less than three months indicates easing government borrowing costs in the domestic fixed-income market. The decline in Treasury yields offers some relief to the Federal Government, which has increasingly relied on domestic borrowing for budget financing.
Investor preference for the longest tenor was striking, with the 91-day and 182-day bills attracting significantly lower subscriptions. The 91-day bill received only N39.42 billion in subscriptions against N100 billion offered, while the 182-day paper garnered N46.87 billion against the same offer. The two shorter maturities combined attracted just N86.29 billion, compared to N1.68 trillion for the 364-day bill.
The auction results suggest that investors are willing to lock funds into longer government securities even with relatively lower yields. This trend points to expectations that interest rates may continue to moderate. The yield curve has become tightly compressed, with the 364-day stop rate of 15.85 percent only 35 basis points above the 91-day rate of 15.50 percent and five basis points above the 182-day rate of 15.80 percent.
The decline in Treasury yields has implications beyond government finances. As Treasury Bill yields serve as benchmarks for bank lending, corporate debt, and other investments, a sustained decline in sovereign yields could create room for lower financing costs for businesses. However, the transmission of this effect depends on banks passing lower funding costs through to borrowers.
The auction coincided with the Central Bank of Nigeria's aggressive liquidity management. On October 6, 2026, the CBN allotted N3.31 trillion in OMO bills after receiving N3.51 trillion in subscriptions. The conflicting signals of tightening liquidity through OMO operations and substantial demand for government debt indicate a fixed-income market entering a potentially important transition.
Key points
- Investors subscribed N1.68trn to one-year Treasury Bills.
- Treasury yields declined by 185bps.
- The Federal Government raised N968.47 billion through Treasury Bills.
