Nigerian govt ramps up short-term borrowing as NTB issuance rises to N4.8trn

THE Federal Government has significantly expanded its short-term borrowing plan for the second quarter (Q2) of 2026, increasing planned Nigerian Treasury Bills (NTB) issuances to N4.8 trillion from the initial N3.95 trillion programme.

An analysis of the original and revised issuance calendars released by the Debt Management Office (DMO) shows the government added about N850 billion to its borrowing target, representing a 21.52 percent increase, while keeping total maturities unchanged at N3.197 trillion.

The revision effectively signals a stronger dependence on domestic short-term debt to finance fiscal obligations at a time of tight liquidity conditions and aggressive monetary tightening by the Central Bank of Nigeria (CBN).

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Although the Q2 programme covers April to June, the additional borrowing was concentrated entirely in June because auctions for April and May had already been concluded before the revision. This means the government is now relying heavily on the final two NTB auctions of the quarter to raise fresh liquidity from the domestic market.

The revised calendar increased implied net new borrowing above maturities from N753.21 billion to N1.603 trillion, more than doubling the government’s initial net borrowing projection for the quarter.

The adjustment was driven mainly by a sharp increase in the issuance of 364-day treasury bills (T-bills), which rose to N3.7 trillion from N2.85 trillion. As a result, the long-tenor instrument now accounts for more than three-quarters of total planned issuance, highlighting the government’s preference for locking in funding for longer periods within the T-Bills market.

At the same time, the allocation for 182-day bills was increased moderately to N500 billion from N400 billion, while planned issuance for 91-day bills was reduced to N600 billion from N700 billion.

The structure of the revised programme suggests the government is attempting to manage refinancing risks by favouring longer-duration short-term instruments, even as borrowing costs remain elevated.

The June auctions carry the weight of the revised strategy. The June 3 offer size was raised from N700 billion to N1 trillion, while the June 17 auction recorded the largest increase, jumping from N450 billion to N1 trillion.

Combined issuances for the two June auctions now stand at N2 trillion, compared with the N1.15 trillion initially planned for the entire month.

Strong investor appetite

Recent market activity indicates strong investor appetite may have encouraged the upward revision. At the June 3 auction, the DMO offered N1 trillion and received subscriptions worth N1.457 trillion, demonstrating that institutional investors still possess substantial demand for high-yield government securities despite tighter liquidity conditions.

However, the larger NTB programme is expected to intensify liquidity pressures across the financial system, especially as it coincides with the CBN’s aggressive Open Market Operations (OMO) aimed at mopping up excess cash.

Liquidity tightening

In May alone, the apex bank reportedly absorbed N3.69 trillion in a single day through OMO auctions, one of the most aggressive liquidity tightening moves in recent times.

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The combined effect of heavy NTB issuance and OMO sales could further tighten money market liquidity, increase funding pressures for banks and investors, and sustain elevated yields in the fixed-income market.

Analysts expect the June 17 NTB auction to have the strongest liquidity impact because only N184.79 billion in T-bills will mature against a planned N1 trillion issuance. This implies a net liquidity withdrawal of about N815.21 billion from the financial system on the settlement date.

The development is likely to trigger increased positioning by pension fund administrators, money market funds, insurance firms, and bank treasury desks seeking to secure liquidity ahead of the auction.

The expanded NTB calendar ultimately reflects rising short-term financing needs by the government during the quarter, even as authorities continue balancing fiscal funding requirements with monetary tightening measures designed to contain inflation and stabilise the naira.