Stop rates at Nigeria’s Treasury Bills (T-bills) auction are expected to trend lower as the Central Bank of Nigeria (CBN) moves aggressively to mop up excess liquidity with a sizeable ₦1.15 trillion offering.

Market analysts say the anticipated moderation in rates will be driven largely by ample system liquidity, estimated at ₦2.24 trillion as of February 3, 2026, alongside the impact of maturing Open Market Operation (OMO) instruments worth ₦1.03 trillion.

These liquidity conditions are expected to sustain strong demand at the Primary Market Auction (PMA), thereby exerting downward pressure on yields.

A primary market auction is the process through which governments or companies issue new securities—such as Treasury bills, bonds, or stocks—directly to investors for the first time, often via the Central Bank of Nigeria or underwriters. It enables capital raising, with bids determining the final price or yield, and is typically held on a bi-weekly basis for Nigerian Treasury Bills.

The CBN is scheduled to conduct its first T-bills PMA for February on Wednesday, February 4, 2026, offering a total of ₦1.15 trillion across three tenors. The auction will comprise ₦150.00 billion in 91-day bills, ₦200.00 billion in 182-day bills, and a dominant ₦800.00 billion in 364-day bills.

In the same week, Treasury bills worth ₦31.18 billion (91-day), ₦18.32 billion (182-day), and ₦619.36 billion (364-day) are set to mature, bringing total maturities to ₦668.86 billion.

With maturities falling short of the offer size, analysts note that some demand pressure may persist, particularly at the short end of the curve.

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Investor appetite has remained robust in recent auctions. At the last PMA, total subscriptions surged by 200.45 per cent to ₦3.44 trillion, from ₦1.14 trillion recorded at the preceding auction. The strong demand came despite a major liquidity-draining OMO auction on January 20, 2026, when the CBN mopped up ₦2.64 trillion, suggesting that investors were positioning to lock in relatively attractive yields.

Demand was heavily skewed toward the long end of the yield curve, with the 364-day bill once again emerging as the bellwether. The tenor attracted ₦3.35 trillion in bids, up from ₦1.38 trillion previously, against an offer size of ₦800.00 billion.

This overwhelming demand led to an 11-basis-point decline in the stop rate on the 364-day bill to 18.36 per cent, from 18.47 per cent at the previous auction. In contrast, demand at the short and mid ends of the curve softened, pushing stop rates higher by 4 basis points and 15 basis points to 15.84 per cent for the 91-day bill and 16.65 per cent for the 182-day bill, respectively. The outcome signalled limited investor interest in shorter tenors at prevailing yield levels.

Overall market participation improved markedly, with the bid-to-cover ratio rising to 3.24 times and the subscription-to-offer ratio climbing to 2.99 times, compared with 1.35 times and 1.34 times, respectively, at the previous auction.

Following the PMA, the secondary market remained bearish, as average Nigerian Treasury Bill (NTB) yields rose to 18.15 per cent as of January 21, 2026, from 17.70 per cent on January 7. The repricing was driven by sell-offs across the curve, particularly at the short end, as investors adjusted to the higher stop rates on newly issued bills.

Analysts said the more attractive pricing at the auction triggered a revaluation of outstanding securities, pushing secondary market yields higher.

In a note to clients, Meristem Research said it expects stop rates at the upcoming auction to trend lower, albeit with a mild upward bias at the short end of the curve.

“We expect stop rates at tomorrow’s NTB auction to trend lower, albeit with a mild upward bias at the short end of the curve,” the firm said.

“This outlook is supported by secondary market yields on one-year bills, currently around 16.30 per cent, which are likely to anchor investor expectations and encourage bids at more competitive rates.”

Meristem added that the strong liquidity position in the banking system, reinforced by maturing OMO instruments of ₦1.03 trillion, should continue to weigh on yields. However, it cautioned that the relatively lower volume of maturing T-bills compared with the offer size could sustain some demand pressure, potentially supporting slightly higher rates at the short end of the yield curve.

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