CBN plans N750bn T-Bills auction to tighten liquidity

CBN plans N750bn T-Bills auction to tighten liquidity

The Central Bank of Nigeria is gearing up to raise N750bn from the Nigerian Treasury Bills primary market auction on Wednesday, as the apex bank intensifies its aggressive liquidity mop- up.

Market analysts widely predict that investor demand will remain highly robust, particularly for longer-term instruments, even as yields show signs of shifting upwards.

Of the total N750bn on offer, the CBN has structured the auction to lean heavily towards long- term paper. The authority plans to offer N100bn each for the 91-day and 182-day Treasury bills, while looking to raise the lion’s share of N550bn from the one-year paper.

This upcoming auction sits squarely within the CBN’s aggressive monetary policy framework designed to curb inflation and stabilise the naira. With the Monetary Policy Rate currently positioned at 26.50 per cent, the apex bank has maintained a highly restrictive, hawkish posture.

Historically, large volumes of maturing Open Market Operations bills and other government payouts have frequently injected trillions of naira back into the banking system, driving banking sector liquidity to record highs. By aggressively offering N750bn in NTBs, the CBN aims to soak up this excess cash, reducing the volume of cheap money circulating in the economy which would otherwise fuel inflationary pressures.

In their latest market briefing, investment firm AAG Capital Limited highlighted the driving forces behind the expected rate movements, noting that policy tighteners are actively pushing rates up: “The CBN’s continued liquidity management stance should keep stop rates broadly stable with a slight upward bias, especially on the 1-year paper.”

The firm further pointed out that this yield movement is directly tied to the government’s current fiscal strategy: “The 364-day stop rate saw the sharpest move, widening by 36 basis points relative to the prior auction, reflecting a sustained aggressive borrowing stance for the quarter.”

Despite the rising rates, market analysts maintain that investor appetite for these government securities remains incredibly resilient: “The market anticipates subscriptions to remain strong, especially with one-year Treasury bills, which have consistently attracted investors seeking long- duration investment options.”

Wednesday’s auction follows a highly competitive previous outing where the CBN offered N700bn across identical tenors. That auction saw subscription levels surge to N2.03tn, up from the N1.86tn recorded in the prior period. Ultimately, the CBN chose to allot N1.06tn to investors.

During that previous exercise, the stop rates cleared at 16.30 per cent per annum for the 91-day bills, 16.50 per cent per annum for the 182-day bills, and 17.70 per cent per annum for the 364- day bills.

This environment has created a highly lucrative market for fixed-income investors. Because Treasury bills are issued at a discount, a 17.70 per cent headline “stop rate” actually translates to an even higher “true yield” (often clearing near 21 per cent once the upfront discount is factored in).

Consequently, institutional investors and local fund managers have consistently bypassed equity options to lock down these high-yield, risk-free, sovereign-backed papers.

With N1.86tn of the total subscription focused solely on the 364-day paper in the last auction, all eyes on Wednesday will be on whether the one-year yield climbs even higher as the CBN tries to rein in system liquidity.

Nigeria’s foreign exchange market recorded its sharpest weekly turnover decline of 2026, with total transactions in the FX Spot and Derivatives markets falling 46.57 per cent to $1.631bn in the week ended 10 July 2026, down from $3.053bn in the preceding week.

The $1.421bn week-on-week decline is the largest single-week drop in FX market turnover recorded so far this year, according to FMDQ weekly FX market commentary obtained by Nairametrics.

Source: https://punchng.com/cbn-plans-n750bn-t-bills-auction-to-tighten-liquidity/