Nigeria’s financial market witnessed another strong display of investor confidence as the Central Bank of Nigeria (CBN) reduced the interest rate on its one-year Treasury Bill after receiving massive demand from investors during its latest auction.
The auction, held on Wednesday, attracted subscriptions worth about N3.62 trillion, far above the N700 billion initially offered by the apex bank across three different Treasury Bill tenors. The overwhelming response highlights the continued appetite of investors for government-backed securities, especially the one-year instrument.
The biggest interest came from the 364-day Treasury Bill, where investors submitted bids worth N3.38 trillion against an offer of N500 billion. This means demand exceeded the amount available by nearly seven times, making it the most sought-after investment option at the auction.
Despite the original offer size, the CBN allocated approximately N1.25 trillion across all three maturities. More than N1.02 trillion of that amount was allotted to the one-year Treasury Bill, reflecting the strong demand from institutional investors looking for relatively safe, long-term investment opportunities.
Following the heavy demand, the CBN lowered the stop rate on the one-year Treasury Bill to 17.35 percent, down from 17.66 percent recorded at the previous auction. The reduction shows that investors were willing to accept slightly lower returns because of the security and stability associated with government securities.
During the auction, investors submitted bids for the one-year bill at rates ranging from 16.98 percent to 20 percent, demonstrating confidence in locking in returns over a longer investment period.
The shorter-term Treasury Bills also recorded healthy demand.
For the 91-day Treasury Bill, the CBN offered N100 billion and received subscriptions worth N135.74 billion. It eventually allotted N130.72 billion, while the stop rate remained unchanged at 16.30 percent.
Similarly, the 182-day Treasury Bill attracted subscriptions of N104.74 billion against an offer of N100 billion. The CBN allocated N99.18 billion, maintaining the stop rate at 16.50 percent despite receiving bids with rates as high as 25 percent.
The latest auction continues a trend that has been evident throughout July, with investors consistently favouring the one-year Treasury Bill over shorter-term instruments.
Earlier auctions in the month also recorded exceptional demand for the 364-day bill, reinforcing its position as the preferred investment option among pension funds, banks, asset managers and other institutional investors.
Financial analysts say the decline in the one-year stop rate suggests there is improved liquidity within the banking system. With more cash available, investors are willing to accept lower interest rates while still benefiting from the safety of government securities.
They also note that the CBN has been issuing larger volumes of Treasury Bills to manage excess liquidity in the financial system while helping the Federal Government meet its borrowing needs under its expanded third-quarter funding programme.
Wednesday’s exercise marked the final Treasury Bill auction for July and forms part of the CBN’s N5.8 trillion Treasury Bill issuance programme for the third quarter of 2026.
Although interest rates have eased slightly, Treasury Bills remain one of the most attractive fixed-income investment options in Nigeria. The one-year instrument continues to deliver one of the highest returns in the market, with its effective yield remaining close to 21 percent.
Market experts believe the strong investor participation reflects confidence in government securities and indicates that Treasury Bills will likely remain a preferred destination for investors seeking stable returns amid changing economic conditions.
