CBN Cuts Treasury Bills Yield Below 17% to Lowest Level Since June

CBN cuts Treasury Bills yield below 17%

The Central Bank of Nigeria (CBN) has cut the stop rate on the one-year Treasury Bill to 16.84%, taking the yield below 17% and to its lowest level since the June 3, 2026 auction.

The reduction came at the CBN's Treasury Bills primary market auction held on Wednesday, September 2, where investors submitted ₦3.35 trillion in bids against ₦700 billion offered. The CBN ultimately allotted ₦865.71 billion, about ₦165.71 billion above the original offer.

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One-Year Treasury Bills Rate Falls to 16.84%

The 364-day Treasury Bill stop rate fell by 31 basis points from 17.15% at the previous August 26 auction.

This represents the second consecutive reduction in the rate on the one-year bill. At the August 26 auction, the CBN had already reduced the rate by 44 basis points from 17.59% to 17.15%.

Combined, the two reductions have brought the 364-day Treasury Bill rate down by 75 basis points, from 17.59% to 16.84%.

The latest movement marks a reversal from the increases recorded through parts of June, July and August.

Investor Demand Remains Strong

Despite the lower stop rate, demand for Treasury Bills remained exceptionally strong.

Total subscriptions reached approximately ₦3.35 trillion, representing about 4.8 times the ₦700 billion offered at the auction.

However, demand was heavily concentrated in the longest maturity. The 364-day Treasury Bill received ₦3.24 trillion in subscriptions against ₦500 billion offered, equivalent to roughly 6.5 times the amount available.

The CBN subsequently allotted ₦762.17 billion on the one-year bill, exceeding the advertised amount by ₦262.17 billion.

Shorter-Dated Bills Attract Weaker Demand

Demand for the shorter Treasury Bills was significantly lower.

The 91-day bill had ₦100 billion on offer and attracted ₦76.82 billion in subscriptions, while ₦76.28 billion was eventually allotted. Its stop rate remained unchanged at 16.30%.

The 182-day bill also had ₦100 billion on offer but received only ₦33.51 billion in subscriptions. The CBN allotted ₦27.27 billion, while its stop rate remained at 16.50%.

The disparity shows a strong preference among investors for the longer-dated security despite the reduction in its yield.

364-Day Bill Dominates Auction Demand

The concentration of demand in the one-year bill was particularly pronounced.

The 364-day instrument accounted for approximately 96.7% of total subscriptions received across the three tenors.

By comparison, the 91-day and 182-day bills together attracted about ₦110.33 billion in subscriptions.

The pattern indicates continued investor preference for locking funds into longer-duration naira government securities, even as the CBN lowers the returns offered at the primary market auction.

Rate Cuts Reverse Earlier Upward Trend

The latest reduction represents a significant change from the direction of Treasury Bills rates earlier in the year.

The 364-day stop rate stood at 16.35% at the June 3 auction before rising to 17.34% on June 17. It subsequently climbed to 17.70% at the July 8 auction and remained elevated through much of July and August.

The rate reached 17.59% at the August 12 auction before beginning its recent decline.

The CBN has therefore moved from a period of rising one-year Treasury Bill yields to two consecutive auction cuts.

Implications for Fixed-Income Investors

The reduction in Treasury Bills yields changes the return profile available to investors in low-risk naira instruments.

Investors seeking short-term government securities now face lower returns on the one-year instrument than they did just two auctions ago.

However, the exceptionally strong demand recorded at the latest auction suggests that Treasury Bills remain attractive to investors despite the lower stop rate.

The continued preference for the 364-day bill also indicates that investors are still willing to commit funds for longer periods at current yields.

What It Means for the Wider Economy

Treasury Bills form an important part of Nigeria's short-term government securities market and are also used by the CBN in managing liquidity within the financial system.

Changes in Treasury Bills yields can influence returns available across other naira-denominated fixed-income instruments and affect investment decisions by banks, institutional investors and other market participants.

The latest reduction therefore provides another indication of changing conditions in Nigeria's money and fixed-income markets.

Potential Housing Finance Implications

Lower yields on government securities can also have wider implications for the housing finance market, although the relationship is not immediate.

Treasury Bills compete with other investment opportunities for institutional and individual investors. Changes in their yields can influence the returns investors expect from other naira assets, including corporate debt and longer-term investments.

For the housing sector, the more important issue is whether declining yields eventually translate into lower borrowing costs for mortgages and property development.

A reduction in Treasury Bills yields alone does not automatically reduce mortgage rates, as lending costs also depend on inflation expectations, bank funding costs, credit risk, monetary policy and other factors.

CBN Maintains Strong Investor Demand

The latest auction demonstrates that investor appetite for Nigerian government securities remains strong even as the CBN reduces the one-year stop rate.

The ₦3.35 trillion in subscriptions against ₦700 billion offered represents substantial demand, while the decision to allot more than the original offer shows the scale of investor participation.

The concentration of demand in the 364-day instrument remains one of the most notable features of the current Treasury Bills market.

Outlook

The CBN's decision to cut the one-year Treasury Bills stop rate to 16.84% marks the second consecutive rate reduction and takes the yield to its lowest level since June 3.

At the same time, demand remains strong, particularly for the 364-day bill, which attracted more than ₦3.2 trillion in subscriptions.

The direction of Treasury Bills yields in coming auctions will remain important for investors, banks and other participants in Nigeria's financial markets. For the housing sector, attention will also remain on whether easing conditions in the fixed-income market eventually contribute to more affordable financing for property development and homebuyers.

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