FG to Issue N5.40 Trillion Treasury Bills in Q4, With a Sharp Bias to One-Year Debt

The Federal Government plans to offer N5.40 trillion in Nigerian Treasury bills between October and December 2026, with nearly three-quarters of the amount concentrated in one-year instruments, according to the fourth-quarter issuance programme published by the Central Bank of Nigeria and the Debt Management Office.

The programme allocates N4.10 trillion, or 75.93% of planned offers, to 364-day bills, while the 91-day and 182-day tenors receive N650 billion each, or about 12.04% apiece.

The one-year bias

The skew towards 364-day paper is deliberate. One-year bills give the government certainty of funding for longer and, in a falling interest-rate environment, allow it to lock in today's yields before rates fall further. The policy rate was cut to 23% in September, and market rates have been easing, so issuing longer paper before the curve shifts lower is a sensible defensive move for the DMO.

It also concentrates refinancing risk. If a large share of the book matures around the same time next year, the government must return to the market in size, whatever the conditions then.

Refinancing, not fresh borrowing

The programme is structured almost entirely around rolling over existing debt. Planned issuance of N5.40 trillion is marginally below the N5.429 trillion in Treasury bills maturing during the quarter, implying a net reduction of about N29.27 billion. The government is not, in aggregate, raising significant new money from the domestic bill market this quarter.

The monthly distribution is uneven. October accounts for N2.15 trillion in planned offers against N1.31 trillion in maturities, a net offer excess of N839.91 billion. November offers N1.60 trillion against N1.919 trillion maturing, a shortfall of N318.60 billion, and December offers N1.65 trillion against N2.201 trillion, a shortfall of N550.58 billion.

The October auction on October 14 offered N450 billion, comprising N50 billion each in 91-day and 182-day bills and N350 billion in 364-day bills. With N80.84 billion maturing for settlement on October 15, a full allotment would have absorbed roughly N369.16 billion from the banking system.

What it costs the government

Every bill sold is a future interest payment. The Q4 programme of N5.40 trillion is a reduction from the N5.80 trillion scheduled in the third quarter, but the government's continued reliance on short-dated domestic borrowing is precisely what inflates the debt-service bill reported by the DMO, which reached N5.28 trillion for domestic debt in the first half of 2026.

The long-term fix is to lengthen the maturity profile and reduce the reliance on rolling short-term bills. This programme moves in the opposite direction.

What to watch

Watch the stop rates at each auction. Falling yields would confirm that the September rate cut is transmitting into government borrowing costs and would attract more investors to the long end. Watch also the level of subscription, which signals how much appetite banks still have for risk-free government paper versus lending to the private sector at a time when policy is trying to nudge credit towards productive uses.