Investor subscription for Nigerian Treasury Bills (NTBs) collapsed to N6.13 trillion in the first two months of 2026, representing a 37 per cent plunge from the N9.68 trillion recorded in the same period of 2025. This sharp decline comes despite a massive 197 per cent month-on-month surge in January 2026 alone, where subscriptions hit N4.69 trillion compared to N1.54 trillion in February 2025. The data reveals a volatile and rapidly cooling market for what is traditionally considered one of the safest government-backed, short-term debt instruments used to manage liquidity.
A deeper look at the auction results shows the Central Bank of Nigeria (CBN) offered investors N2.3 trillion worth of bills in this period, a 51.8 per cent increase over the N1.52 trillion offered in early 2025. However, the CBN ultimately settled for raising only N2.1 trillion, which is about a 23 per cent drop from the N2.72 trillion it successfully raised in the first two months of the previous year. This indicates that while the government attempted to borrow more, investor demand was insufficient to meet the full offer, forcing the CBN to accept less.
The primary driver of this dwindling demand appears to be a significant drop in yields across all NTB tenors. The spot rate on the 364-Day bill fell to 16.99 per cent as of the February 2026 auction, down from 18.43 per cent in February 2025. Similarly, the stop rate on the 182-Day bill moved from 18 per cent to 16.65 per cent, and the rate on the 91-Day bill closed at 15.84 per cent, down from 17 per cent a year earlier. These declining returns make NTBs less attractive, especially when compared to the current inflation rate of 15.05 per cent as of January 2026, which erodes real investment gains.
This trend follows a key policy shift by the Monetary Policy Committee (MPC) of the CBN, which reduced the benchmark Monetary Policy Rate (MPR) to 26.50 per cent at its first meeting in 2026. Analysts from Cordros Research noted that 'the 50 basis points reduction in the MPR is unlikely to trigger a material decline in yields,' yet the data shows a clear and simultaneous drop in both policy rates and NTB yields. The relationship suggests broader monetary easing is putting downward pressure on government borrowing costs.
In practical terms, the N6.13 trillion total subscription was heavily skewed, with an estimated N5.8 trillion of it concentrated in just two months, highlighting a potential liquidity rush at the start of the year that quickly faded. For the government, this means raising debt is becoming more challenging and potentially more expensive if it needs to increase yields to attract buyers. For investors, particularly institutional ones, the shrinking yield spread over inflation reduces the real income generated from these traditionally low-risk assets.
The 37 per cent year-on-year subscription drop is a stark indicator of changing market sentiment. When yields were higher in 2025, the government raised N2.72 trillion from a larger subscription pool of N9.68 trillion. In 2026, with lower yields, it raised less money (N2.1 trillion) from a much smaller pool (N6.13 trillion). This represents a significant tightening in the primary market for government securities, which could impact liquidity management and fiscal operations if the trend continues.
Looking ahead, the key metric to watch is whether the inflation rate, currently at 15.05 per cent, continues to converge with or fall below NTB yields. If inflation declines further, real returns could improve even with lower nominal rates, potentially reviving demand. The next moves by the CBN's MPC will be critical; further reductions in the MPR could maintain downward pressure on NTB yields, while a pause or hike could stabilize the market.
The next NTB auction results will provide the clearest signal of whether this downturn is a temporary correction or a sustained shift. Investors and policymakers will be watching to see if subscription levels recover or if the government will need to adjust its issuance strategy or yields to meet its funding targets in the coming quarters.
