DMO Rejects ₦763bn of T-Bill Bids as One-Year Rate Rises

Investors offered the Federal Government ₦1.032 trillion at the 14 October Nigerian Treasury Bills auction, but the Debt Management Office (DMO) accepted only ₦269.06 billion, about 26% of the bids, and let the one-year rate rise to 15.90% from 15.85%. It is the first increase in the one-year stop rate since August, after weeks of falling yields that followed the Central Bank of Nigeria's (CBN) rate cut in September. The government also borrowed well below the ₦450 billion it offered. Here is what happened, why, and what it means if you buy T-bills.

The auction at a glance

The CBN ran the auction for the DMO. The results, analysed by the Financial Markets Dealers Association (FMDA) and reported by Nairametrics and Punch, show demand piled into the one-year bill.

The one-year bill drew about 95% of all bids and was 2.81 times oversubscribed. Yet the DMO took only about 22% of those bids. Bids ranged from 15.00% to 18.18%, so many investors were asking for far more than the government was willing to pay. Roughly ₦763 billion was turned away, almost all of it for the one-year bill.

Why the DMO said no to most of the money

The results do not say why bids were rejected. FMDA's reading is that the DMO was holding the line on borrowing costs. Accepting more bids would have meant accepting higher rates on a larger amount, raising the government's interest bill. Instead, it took a smaller amount at a small rise of five basis points.

Only ₦80.84 billion of bills were maturing, so the ₦269.06 billion sale still added about ₦188.22 billion to the stock of bills outstanding.

How the one-year rate has moved

Rates fell as the CBN's Monetary Policy Committee cut the policy rate by 350 basis points to 23% on 22 September. The 14 October result breaks that run, slightly. Demand for the one-year bill also cooled, down about 42% from ₦1.683 trillion on 7 October, when ₦900 billion was offered.

Discount rate versus true yield

The stop rate is a discount rate, not the return you earn. T-bills are sold below face value and pay the full amount at maturity. The CBN reported true yields of 16.14% for the 91-day bill, 17.16% for the 182-day bill and 18.91% for the 364-day bill.

A simple example, our own calculation: at a 15.90% discount rate, a one-year bill with a face value of ₦1,000,000 costs about ₦841,436. At maturity you get ₦1,000,000, a gain of about ₦158,564, which works out to roughly 18.9% on the money you put in. With inflation at 14.63% in September, that is a positive real return of about four percentage points before any fees.

A flood of cash in the banks

The auction came during a week of very high liquidity. About ₦2.41 trillion of CBN Open Market Operations (OMO) bills matured on 13 October, and no new OMO bills were sold. Banks parked the cash with the CBN. Net placements at the Standing Deposit Facility rose from about ₦3.86 trillion on 13 October to ₦6.08 trillion on 16 October, CBN data reported by Nairametrics show.

AIICO Capital put system liquidity at about ₦6.28 trillion at the end of the week and said the overnight rate eased 34 basis points to 20.38%. That much cash would normally push yields down, yet secondary market yields were mixed. AIICO said the 91-day yield rose 30 basis points to 17.53% and the one-year yield eased 10 basis points to 18.61%. FMDA put the one-year secondary yield at 18.38% just before the auction; the measures and dates differ.

What to watch

• The next T-bill auctions. Will the DMO keep cutting its allotments, and will the one-year rate keep creeping up?
• The FGN bond auction on Monday, 19 October. Bond yields rose this week, with the 10-year up 51 basis points to 16.94%, AIICO said.
• The CBN's next rate meeting on 23 and 24 November.

What this means for investors

• Rates may have found a floor for now. After falling for weeks, the one-year rate ticked up. That is mildly good news for new buyers.
• Getting allotted is harder. When the DMO rejects most bids, bidding too high can mean you get nothing. Bids close to the previous stop rate have a better chance.
• Look at true yield. Compare the true yield, not the discount rate, with fixed deposits and money market funds.
• Short bills went begging. The 91-day and 182-day bills were undersubscribed, as investors chose to lock in rates for longer.

This is for information only and is not investment advice.

FAQ

What is the current one-year treasury bill rate in Nigeria?

At the 14 October 2026 auction, the 364-day bill stop rate was 15.90%, with a CBN-reported true yield of 18.91%.

Why did the DMO reject treasury bill bids?

The results gave no reason, but analysts at FMDA said the DMO limited sales to avoid accepting higher rates. Bids for the one-year bill went as high as 18.18%.

How much did the government raise at the 14 October T-bill auction?

It sold ₦269.06 billion against ₦450 billion offered and ₦1.032 trillion in bids.

Sources

• Nairametrics, "DMO rejects 74% of NTB bids, raises one-year rate to 15.90% for first time since August" (16 Oct 2026)
• Punch, "DMO snubs N763bn bids as T-bill rate climbs" (17 Oct 2026)
• Nairametrics, "Banks' CBN deposits rise above N6 trillion after N2.4 trillion OMO repayment" (16 Oct 2026)
• AIICO Capital, "Financial Markets Week Ended 16 October 2026"
• Central Bank of Nigeria, MPC Meeting Calendar for 2026