The Central Bank of Nigeria (CBN) is set to auction ₦1.05 trillion worth of Treasury Bills on Thursday, March 5, 2026, as investors redirect funds from Tuesday’s Open Market Operations (OMO) sale.
The offer comes barely 48 hours after the apex bank conducted an OMO auction where demand far outweighed supply.
With liquidity in the banking system estimated at ₦5.64 trillion following recent maturities, market participants are watching closely to see how much of the new Treasury Bills will be absorbed, and at what rates.
Liquidity Surges to ₦5.64 Trillion
System liquidity climbed from about ₦4.38 trillion to ₦5.64 trillion earlier this week, largely driven by maturing OMO instruments. Roughly ₦960 billion from those bills hit the system, adding to the cash already available to banks and investors.
Despite receiving more than ₦711 billion in bids at Tuesday’s OMO session, the CBN allotted just ₦235.60 billion. The move left a sizeable volume of funds uninvested, pushing banks and offshore investors toward the Treasury Bills market in search of returns.
OMO Auction Sets the Tone
At the OMO sale, the CBN skipped the 7-day tenor and focused on the 98-day and 105-day bills. Both cleared at stop rates of 19.35% and 19.40% respectively.
The decision to allot less than half of the amount on offer signalled a cautious liquidity management stance. It also created fresh demand pressure ahead of Thursday’s Treasury Bills auction, with investors keen to avoid sitting on idle cash.
Market dealers say the under-allotment has effectively primed today’s auction for strong participation, particularly as investors seek to secure current yield levels amid expectations that rates could ease later in the year.
Secondary Market Reflects Strong Demand
Trading in the secondary Treasury Bills market has already pointed to sustained demand. The average benchmark yield slipped to 17.23% at the close of trading on Tuesday.
The OMO secondary market also saw yields moderate to 20.22%, showing buying interest in outstanding bills.
Analysts note that falling secondary yields usually mean expectations of stable or softer primary market rates.
364-Day Bill Likely to Lead Demand
Attention is expected to centre on the 364-day instrument, traditionally the most attractive tenor for pension funds and foreign portfolio investors seeking to lock in yields for a longer period.
While the 91-day and 182-day bills may see steady demand, traders anticipate more aggressive bidding on the one-year paper.
Investors are positioning ahead of continued domestic borrowing, as the Federal Government’s 2026 budget deficit is projected at about ₦23.85 trillion.
Managing Deficit and Currency Stability
Beyond liquidity control, the ₦1.05 trillion auction plays into broader fiscal and monetary objectives. Treasury Bills are key funding sources for government spending, while also serving as a tool for mopping up excess cash to manage inflationary pressures.
At current yield levels, the instruments also help sustain interest in naira assets, offering investors an incentive to remain in local currency positions.
When auction results are released, the bid-to-cover ratio and stop rates will provide a clearer picture of investor appetite and how much of the ₦5.64 trillion liquidity the CBN succeeds in drawing out of the system.
