Investors Lock-in Yields Ahead of CBN Treasury Bills Auction
Fixed income market investors locked in yields on naira asset in the secondary market ahead of primary market auction on Wednesday, traders said in separate updates obtained by MarketForces Africa,
The Central Bank of Nigeria is scheduled to conduct its last Treasury bills auction for the month of October on Wednesday, October 28, 2026, offering N800 billion across three maturities as fixed income investors position aggressively to lock in yields ahead of further monetary easing.
The apex bank will offer N800 billion for investor subscriptions across the 91-day, 182-day and 364-day tenors, with the bulk of the offer concentrated in the longer-dated 364-day paper — reflecting the CBN’s strategy to extend the duration of its short-term borrowing programme.
Auction Breakdown
The CBN is targeting N100 billion from the 91-day Treasury bills and a further N100 billion from the 182-day tenor. However, in anticipation of stronger investor appetite at the longer end of the curve, the apex bank is offering N600 billion worth of 364-day Treasury papers — representing 75% of the total N800 billion on offer.
Pre-Auction Secondary Market Activity
Fixed income market investors signaled their positioning ahead of the auction on Tuesday, with pre-auction demand emerging in the secondary market.
Investment firms reported that the average yield on Nigerian Treasury bills moderated by one basis point to 17.92%, reflecting cautious but active buying activity as investors sought to gauge the likely stop rates at Wednesday’s primary market auction.
Yield Environment and Investor Positioning
Spot rates across standard tenors have declined, reflecting a 350 basis points reduction in the Monetary Policy Rate benchmark as the CBN shifts toward monetary easing at the last committee meeting.
The policy rate cut has driven down real returns on Naira-denominated assets, creating a window of opportunity for investors to lock in current yields before further cuts compress returns further.
Analysts said demand at Wednesday’s auction will remain strong given the elevated excess liquidity levels in Nigeria’s financial system, with portfolio investors and asset managers expected to increase bets on Treasury bills as part of deliberate efforts to secure yields in an easing rate environment.
Analyst Views
AAG Capital Limited captured the market dynamic in a research note ahead of the auction, stating that Wednesday’s offering presents a larger supply to the market at a time when investors are demanding higher yields despite easing inflation and robust liquidity in the interbank market.
The firm projected a marginal increase in cutoff rates at the auction, noting that any issuer intervention by the CBN could alter the final stop rates across tenors.
The combination of abundant banking system liquidity, declining benchmark rates and strong institutional demand is expected to generate significant oversubscription at Wednesday’s auction — particularly at the 364-day tenor where the N600 billion offer provides the largest yield-locking opportunity available to fixed income investors in the October auction calendar.
Market Context
The midweek auction is the final primary market Treasury bills offering for October 2026, making it a key event for fund managers and asset managers seeking to deploy excess cash before month-end.
The N800 billion total offer represents one of the larger single-auction sizes in recent months, signalling the CBN’s continued use of Treasury bills as its primary tool for managing banking system liquidity.
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