Nigeria’s multi-trillion-naira fiscal requirement has triggered an unprecedented frontloading strategy across the sovereign yield curve.
In the Treasury bills market alone, the government offered ₦7.95 trillion across eight auctions in the first half of the year, with total allotments settling at ₦8.22 trillion.
Against maturities of ₦5.51 trillion, this translated into a massive net issuance of ₦2.71 trillion—a near eightfold expansion compared to the ₦348.52 billion net borrowing recorded during the corresponding period of 2025.
The Low-Cost Liquidity Sterilization Channel
Throughout the first half of the year, the financial system was awash with liquidity, averaging ₦4.50 trillion in excess banking floats driven by a staggering ₦13.00 trillion in maturing government securities. Left unchecked, this excess capital risks amplifying broad-based core price pressures.
While the central bank historically relied on Open Market Operations (OMO) to mop up this float, OMO stop rates have consistently traded above standard Treasury bill yields, turning liquidity sterilization into a highly expensive corporate drag for the CBN.
Expanded Treasury bill issuance provides an alternative, lower-cost channel to absorb excess liquidity while simultaneously funding the state’s expanding deficits, according to analysts at Meristem Securities.
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