The Central Bank of Nigeria (CBN) raised the stop rate on its benchmark 364-day Treasury Bill to 17.59% at Wednesday’s auction, defying expectations that overwhelming demand would push borrowing costs lower.

Investors submitted a combined N4.4 trillion in bids across the three-tenor offer against just N700 billion advertised, according to auction results obtained by Nairametrics at the close of business on Wednesday, August 12, 2026.

The rate hike marks a sharp reversal from the previous auction on July 29, when the CBN eased the one-year stop rate by 31 basis points despite subscriptions reaching nearly seven times the offer size.

This time, subscriptions on the 364-day bill alone reached N4.19 trillion, more than eight times the N500 billion on offer, yet the apex bank raised rather than hold or lowered the clearing rate.

What the data is saying:

Wednesday’s auction shows that the CBN is not yet ready to relinquish its grip on elevated borrowing costs, even as demand for the longer-tenor instrument remained exceptionally strong.

• 364-day bill: N500 billion offered; N4.19 trillion subscribed; N1.26 trillion allotted. Stop rate rose 24 basis points to 17.59% from 17.35%.
• 182-day bill: N100 billion offered; N63.97 billion subscribed; N47.48 billion allotted. Stop rate held at 16.50%.
• 91-day bill: N100 billion offered; N162.21 billion subscribed; N148.57 billion allotted. Stop rate held at 16.30%.

Maturities span November 12, 2026, February 11, 2027, and August 12, 2027, for the 91-day, 182-day and 364-day bills, respectively.

The scale of oversubscription on the 364-day bill would typically give the CBN ample room to clear bids at a lower or unchanged rate, as it did at the July 29 auction when nearly sevenfold oversubscription was met with a 31-basis-point rate cut.

Instead, the CBN allotted N1.26 trillion against N500 billion advertised, an overshoot of N760 billion, while simultaneously raising the price it was willing to pay for the liquidity.

More insights:

The auction is part of the CBN’s Q3 2026 NTB Issuance Programme targeting N5.8 trillion in gross issuance between July and September, aimed partly at financing the government’s roughly N29.20 trillion fiscal deficit.

The August 12 auction is the second consecutive large-offer auction, alongside July 8 and July 29, where the 364-day bill cleared at a rate above 17%, keeping the instrument’s yield firmly higher than headline inflation.

For investors, Wednesday’s rate hike suggests that even with liquidity abundant and demand overwhelming, the CBN is still willing to pay up for long-tenor funding, implying that attractive T-bill yields may last a little longer.

This raises fresh questions about how committed the apex bank is to the rate-easing path markets had started pricing in.

Get up to speed:

At the July 15 auction, the CBN allotted N1.19 trillion after investors bid N2.87 trillion for the 364-day bill, with rates easing 4 basis points.

• At the July 8 auction, the CBN allotted N1.06 trillion and hiked the one-year rate to 17.70%, then the highest in weeks.
• By July 29, the CBN allotted N1.25 trillion as subscriptions hit N3.38 trillion, while the stop rate eased 31 basis points.

Wednesday’s hike reverses that easing trend despite N4.19 trillion in demand against N500 billion offered for 364-day bill.

What you should know:

The auction follows a week of unusually heavy liquidity inflows into the banking system, with a reported N2.48 trillion OMO repayment settling on August 11 alone, part of a broader N5.21 trillion net injection over the preceding week.

• The scale of fresh cash sitting with deposit money banks would ordinarily be expected to compress rates as institutions compete to deploy funds, yet the CBN’s decision to hike suggests it is using the auction as an additional sterilisation tool, not just a funding exercise.
• In July alone, the CBN mopped up N7.2 trillion through OMO sales, pushing cumulative 2026 sterilisation past N50 trillion.
• Analysts expect the first CBN rate cut at the September MPC meeting, projecting current yield levels as potentially the last opportunity to lock in returns above 17% on the one-year instrument.

The 91-day and 182-day bills held their stop rates flat, while the 182-day bill was again undersubscribed, attracting just 64% of its N100 billion offer.

The outcome complicates expectations in Nigeria’s fixed-income market, where easing stop rates alongside strong demand had fuelled expectations of a gradual downward drift in yields ahead of an anticipated rate cut at the September Monetary Policy Committee meeting.

SOURCE: NAIRAMETRICS