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Why Investors Are Rushing Into Nigeria’s One-Year Treasury Bills

The Central Bank of Nigeria allotted N829.32 billion at its Treasury Bills Primary Market Auction held on Tuesday, May 20, 2026, as investor demand again exceeded the amount offered.

The auction showed strong appetite for government securities, especially the 364-day bill, as investors continued to lock in elevated yields amid uncertainty in Nigeria’s broader macroeconomic environment.

According to the auction results, total subscriptions reached about N1.99 trillion, far above the N650 billion offered across the 91-, 182-, and 364-day tenors. This means investors submitted bids worth more than three times the amount the CBN initially offered.

One-Year Treasury Bill Attracts the Strongest Demand

The strongest demand came from the 364-day Treasury bill, which attracted N1.84 trillion in subscriptions against an offer of N500 billion.

The CBN eventually allotted N683.29 billion on the one-year paper, meaning the tenor accounted for the bulk of the total amount sold at the auction. This gave the 364-day bill a subscription-to-offer ratio of about 3.7 times.

The result shows that investors remain more interested in long-dated government securities than in short-term instruments. The reason is straightforward: they want to secure current high yields before market rates begin to fall.

Medium-Term Bill Also Sees Solid Demand

The 182-day Treasury bill also recorded decent demand. Subscriptions stood at N81.04 billion, compared with the N50 billion offered.

The CBN allotted N78.59 billion on the 182-day paper, showing that investors still had some appetite for the mid-tenor instrument.

However, demand was much stronger at the long end of the curve, suggesting that investors prefer to commit funds for a longer period while yields remain attractive.

Short-Term Bill Records Weakest Demand

The 91-day Treasury bill was the weakest part of the auction.

Investors submitted N68.63 billion in subscriptions against the N100 billion offered. This was the only tenor that failed to meet its offer size.

Despite the softer demand, the CBN allotted N67.45 billion on the short-term bill.

The weak subscription for the 91-day instrument suggests that investors are less interested in short-term reinvestment at current rates. Many appear to prefer longer maturities that allow them to lock in yields for a full year.

Stop Rates Remain Almost Unchanged

Despite the heavy demand, stop rates were broadly stable across all three tenors.

The 91-day bill stop rate moved slightly to 15.95% from 15.949% at the previous auction. The movement was almost flat.

The 182-day bill remained unchanged at 16.14%, while the 364-day bill eased slightly to 16.149% from 16.15%.

This shows that the CBN did not allow strong demand to push rates significantly lower. It also suggests the apex bank is still managing yields carefully while maintaining control of liquidity in the financial system.

Why Investors Are Buying More Treasury Bills

The strong demand for Treasury bills reflects the search for safe, high-yield investments.

In a high-interest-rate environment, government securities become attractive because they offer relatively low risk and predictable returns. For pension funds, asset managers, banks and institutional investors, Treasury bills provide a way to preserve capital while earning strong yields.

The preference for 364-day bills also suggests that many investors expect yields to moderate in the coming months. By buying longer-dated bills now, they can secure today’s rates before any possible decline.

This is especially important as markets continue to watch inflation trends, CBN policy direction and liquidity conditions.

May 20 Auction Follows Another Oversubscribed Sale

The May 20 auction came after another strong Treasury bills sale on May 6, when the CBN allotted N731.75 billion.

At that auction, total subscriptions reached N2.41 trillion against a combined offer of N700 billion. Again, demand was dominated by the 364-day bill, which attracted N2.23 trillion in subscriptions.

The back-to-back oversubscription shows that investor appetite for Nigerian government securities remains strong. It also confirms that liquidity is still available in the market, even as businesses continue to face high borrowing costs.

What This Means for the Market

The latest auction suggests that Nigeria’s fixed-income market remains attractive to investors looking for risk-free returns.

However, it also raises a broader question. When government securities offer high returns, investors may prefer to put money into Treasury bills instead of lending to businesses or investing in productive sectors.

This can affect private-sector credit, especially for companies that need affordable funding to expand, hire workers or increase production.

For the CBN, the challenge is to manage inflation, control liquidity and keep investor confidence without making government borrowing too expensive.

Outlook for Treasury Bill Yields

The near-stable stop rates suggest that Treasury bill yields may be approaching a short-term floor.

Further declines may depend on changes in inflation, liquidity conditions and the CBN’s monetary policy stance. If inflation eases and market liquidity remains strong, yields could gradually moderate.

However, if inflation remains sticky or the CBN keeps policy tight, yields may stay elevated for longer.

For now, the 364-day bill remains the clear favourite among investors.