CBN cancels N700bn Treasury Bills auction amid liquidity squeeze
The Central Bank of Nigeria (CBN) has cancelled the N700bn Treasury Bills auction scheduled for August 5, 2026, following a sharp tightening of liquidity in the banking system.
The decision came after the apex bank withdrew a combined N4.69tn from the banking system through Open Market Operations (OMO) in two consecutive sessions.
On August 3, the CBN absorbed N2.52tn through a 141-day OMO bill. The following day, it withdrew another N2.17tn through 112-day and 113-day OMO bills.
The scale of the two-day liquidity withdrawal appears to have prompted the authorities to suspend the planned Treasury Bills auction in order to avoid placing additional pressure on funds available to banks.
Although the CBN, acting on behalf of the Debt Management Office (DMO), did not give an official reason for the cancellation, market participants attributed the timing to concerns over excessive liquidity tightening.
The cancelled auction was initially scheduled to offer N700bn across 91-day, 182-day and 364-day Treasury Bills, with settlement expected on August 6.
The latest move comes after the CBN sterilised N7.18tn through OMO auctions in July. This brings the total amount withdrawn from the banking system through OMO operations in July and the first four days of August to more than N11.8tn.
The liquidity squeeze has also been reinforced by strong demand for government securities.
At the July 29 Treasury Bills auction, the CBN allotted about N1.25tn, significantly above the initial N700bn offer, largely due to strong demand for the 364-day bill.
The development leaves authorities balancing two competing objectives: raising funds through domestic borrowing while preventing excessive tightening of liquidity in the banking system.
The cancelled auction formed part of the N5.8tn Treasury Bills issuance programme for the third quarter of 2026. The programme targets approximately N3.16tn in net new borrowing after accounting for maturing bills.
The August 5 auction was also one of six major N700bn issuance sessions scheduled under the quarter’s borrowing programme.
The CBN and DMO have not indicated any changes to the remaining auction dates in the Q3 calendar. Investors will therefore be watching closely to see whether the cancelled N700bn offer will be rescheduled or added to subsequent auctions.
The cancellation could affect the pace of government borrowing through Treasury Bills if liquidity conditions remain tight and the CBN continues to rely heavily on OMO operations to absorb funds from the banking system.
