Activity in Nigeria’s short-term debt market weakened in August 2026, as Treasury bills (T-bills) sold through auctions fell by N1.28 trillion month-on-month, while commercial paper (CP) quotations on the FMDQ Exchange plunged by almost 80 per cent.

Latest data from FMDQ Securities Exchange showed that T-bills valued at N2.21 trillion were sold through auctions in August, down 36.65 per cent, or N1.28 trillion, from N3.502 trillion recorded in July.

Analysts, however, said the decline did not indicate weaker investor appetite for government securities. Rather, they attributed the lower monthly sales to the volume and timing of securities offered by the authorities and changes in liquidity management operations.

Investor demand remained strong. At the August 26 T-bills auction, the Debt Management Office (DMO) offered N700 billion but received subscriptions of N3.79 trillion, representing a bid-to-cover ratio of 5.41 times.

The DMO eventually allotted N762.89 billion, with the 364-day bill attracting particularly strong demand. Investors subscribed N3.63 trillion against N500 billion offered.

The demand came amid elevated yields and substantial liquidity in the banking system. Stop rates stood at 16.30 per cent for the 91-day bill, 16.50 per cent for the 182-day instrument and 17.15 per cent for the 364-day bill.

Although the 364-day rate was lower than at the previous auction, analysts said it remained attractive to investors seeking relatively predictable returns from government-backed securities.

Cowry Research projected strong participation in the T-bills market, citing robust liquidity and continued demand for high-yielding sovereign instruments. It expected secondary-market yields to remain broadly stable, barring significant changes in liquidity conditions.

Cordros Research similarly said system liquidity was expected to remain robust, supported by inflows from maturing OMO bills.

About N1.58 trillion in OMO maturities was expected to enter the financial system, potentially providing additional funds for short-term fixed-income investments.

The CBN also expanded participation in its Open Market Operations (OMO) to a wider range of investors in August, with OMO auctions attracting substantial demand.

On August 26, the CBN offered N1 trillion but received N4.26 trillion in subscriptions before allotting N2.80 trillion.

The availability of OMO securities provided investors with another high-yielding short-term instrument alongside Treasury bills. Stop rates stood at 19.90 per cent for the 97-day instrument and 19.65 per cent for the 132-day bill.

Meanwhile, activity in the corporate short-term debt market weakened sharply.
Only three commercial papers valued at N25.53 billion were quoted on the FMDQ Exchange in August, compared with N126.71 billion in July.

The N101.18 billion decline represented a month-on-month contraction of 79.85 per cent.

The sharp fall suggests that the contraction was driven more by the supply side of the CP market, particularly the number and size of new corporate issues, than by a broad withdrawal of investors from fixed-income securities.

Commercial paper provides companies with an avenue to raise short-term funds outside conventional bank borrowing. FMDQ said its CP quotation platform provides issuers with access to investors while improving transparency and liquidity at the short end of Nigeria’s corporate yield curve.