Ethiopia's Treasury Bill auction attracts ETB 79.2 billion in bids as investor demand rises

An analysis of the 1,003rd T-bill auction — what the bids, cut-offs, and the one-year spike tell us about the market.

Ethiopia's government held its 1,003rd Treasury Bill (T-bill) auction on May 13, 2026, offering ETB 45.35 billion worth of short-term government securities.¹ Investors submitted bids totaling ETB 79.22 billion, nearly 1.75 times the amount on offer. The government accepted ETB 44.79 billion, equivalent to 98.8% of the amount it offered. The actual offer of ETB 45.35 billion was ETB 3.5 billion above the pre-announced Q4 EFY 2018 calendar plan of ETB 41.85 billion. The bid-to-cover ratio stood at 1.75, reflecting solid investor confidence.

Eligible bidders include commercial banks, public institutions (such as the Development Bank of Ethiopia and social security agencies), and individual investors; the last group can now participate through the Ethiopian Securities Exchange with a minimum stake of just 5,000 birr.

With roughly ETB 89 billion of T-bills maturing over the next 30 days, this auction is best understood as a rollover operation, not new borrowing. The headline figure measures the government's success at refinancing existing obligations on better terms, not the size of fresh debt being taken on. ⓘThe ~ETB 89 billion maturing figure is our own computation from accepted-amount history; the government's actual near-term redemption profile may differ due to settlement timing, supplementary auctions, or other arrangements not visible in public data.

Auction snapshot · May 13, 2026 (1003rd auction)

The planned and actual offer differ: the government floated ETB 45.35 billion against a calendar plan of ETB 41.85 billion, an upsize of ETB 3.5 billion concentrated entirely at the 182-day.

Offer composition: where the government concentrated supply

The May 13 offer leaned heavily on the 182-day (six-month) bill, which made up 44.6% of the amount offered, followed by the 364-day at 27.7%, the 91-day at 18.5%, and the 28-day at 9.2%.

That tilt is a deliberate way to manage refinancing risk. Concentrating the offer in the six-month tenor staggers the maturity profile: it avoids bunching repayments into the very near term while sidestepping the elevated cost of one-year money. In effect, the government is terming out at six months to spread short-term repayment risk across the calendar rather than paying up at the long end.

The offer also ran above plan. The MoF calendar penciled in ETB 41.85 billion for May 13; the government actually offered ETB 45.35 billion, with the entire ETB 3.5 billion difference added at the 182-day. ⓘAn actual offer above the MoF plan usually signals an additional liquidity need by the government. The specific driver is inferred, not confirmed. An offer above plan usually signals an additional liquidity need, often a heavier near-term redemption to roll over.

In comparison to previous auctions, the trend is a further tilt toward the 182-day: its share rose to 44.6% from roughly 35–40% across the April auctions, while the 364-day share was trimmed to 27.7% from about 30% — consistent with a government reluctant to lock in higher long-end yields.

Seasonally, the government has tended to lean on shorter maturities (28- and 91-day combined) in May–June and again in November–December; the lightest short-tenor offering has historically come in February (around 25%). The May 13 auction ran against that seasonal grain: short paper was only about 28% of the offer.

Demand by tenor

Demand was strongest in absolute terms for the 182-day tenor, which attracted ETB 27.83 billion in bids against an offer of ETB 20.24 billion (about 1.37× cover). The 91-day tenor drew ETB 24.50 billion against ETB 8.37 billion offered — the highest oversubscription in percentage terms (2.93×). The 28-day tenor came in with ETB 14.90 billion against ETB 4.19 billion offered (3.56× cover), the most heavily oversubscribed tenor of the auction.

The 364-day tenor was the softer spot, receiving ETB 11.99 billion in bids against ETB 12.56 billion offered — the only tenor where bids fell below the offered amount, and the first 364-day undersubscription since November 2025. The government accepted the full bid amount, but at a sharply higher cut-off yield than recent auctions.

How yields changed from the previous auction

Compared with the April 29, 2026 auction, cut-off and weighted average yields fell across all short and medium tenors, signaling investor willingness to lend at lower rates than before.

The most notable movement was at the one-year tenor: its cut-off yield rose sharply from 16.32% to 19.00%, a jump of 268 basis points, even as its weighted average yield barely moved, declining only 6 basis points to 15.43%. This unusual gap suggests that while most accepted bids came in at moderate yields, some investors demanded substantially higher returns to hold one-year paper.

Inflation is not the only factor at the long end. Ethiopia's secondary market for government securities remains underdeveloped, which limits a holder's ability to sell a one-year bill before maturity. Investors demand extra compensation for that illiquidity, amplifying the premium on one-year paper.

For the shorter tenors, movements were straightforward:

• 28-day: cut-off fell from 11.00% to 10.25%; weighted average dropped 99 bps to 10.01%.
• 91-day: cut-off fell from 12.24% to 11.85%; weighted average declined 80 bps to 11.44%.
• 182-day: cut-off edged down from 14.22% to 14.00%; weighted average fell 24 bps to 13.98%.

The blended weighted average across all tenors fell from 13.88% to 13.48%, a drop of 40 basis points.

Six-auction runway: how the market got here

The 1,003rd auction's outcomes are the culmination of recent result trends. The six auctions that preceded it, ⓘThe six-auction window is chosen as a pragmatic span that gives sufficient insight into near-term market movements; it is not a statistically derived lookback. from February 18 to April 29, 2026, tell a coherent story of falling yields and recovering demand.

The six auctions before May 13 — plan, offer, demand, yields

Three observations stand out. First, the government's blended cost of new T-bill debt fell from about 15.91% on February 18 to 14.13% on April 29, a 178-basis-point drop in three months. Second, demand inflected on April 1, with bid-to-cover jumping from below 1.0× to roughly two-times-over and staying there. Third, the April 29 auction was a milestone: the 28-, 91-, and 182-day tenors all cleared at exactly the lowest yield bidders offered — the first such "perfect-cover" reading on three tenors since the auction-based market opened in December 2019.

The cover jump on April 1 was as much about supply as demand. Through February and mid-March the government floated large offers, ETB 60–63 billion, well above plan, but bids did not keep pace, leaving those auctions under- or barely-subscribed. From April 1 it brought offers back toward plan and roughly halved them, even as bids rose toward ETB 60–75 billion. A smaller offer met by larger demand is what lifted cover to about 2.0× and held it there.

The May 13 result extends that trend. Every tenor except the 364-day continued a pattern already in motion; the one-year was the single break.

What is driving these trends?

The broad decline in T-bill yields reflects a shifting economic environment.

Disinflation, with a recent wobble. Inflation, running above 20% only two years ago, has come down sharply. The Ethiopia Statistics Service reported headline inflation at 9.7% in February 2026 and a multi-year low of 9.4% in March 2026. Data released just before this auction, however, showed inflation re-accelerating to 11.7% in April 2026 (food 13.5%), driven by higher food prices.² This likely contributed to the spike in the 364-day cut-off.

A tight monetary stance. The NBE has held its benchmark policy rate at 15% since adopting an interest-rate-based framework in August 2024. The July 2025 end of mandatory bank purchases of government bonds has freed bank balance sheets to absorb more T-bills,⁴ which helps explain strong demand at the shorter tenors.

External risks remain in the background. The MPC has warned that Middle East tensions and elevated fuel and fertilizer prices could push costs higher and feed food inflation. The government has drawn on foreign currency reserves to cushion consumers, but these pressures may continue to feed inflation.

What to watch in the next auction

The next auction is scheduled for May 28, 2026 under the Ministry of Finance's Q4 EFY 2018 calendar.³ That calendar plans an offer of about ETB 44.8 billion, again weighted to the 182-day: roughly ETB 17.9 billion at the 182-day (40%), ETB 13.4 billion at the 364-day (30%), ETB 9.0 billion at the 91-day, and ETB 4.5 billion at the 28-day.

The 364-day tenor is the one to watch. The question is whether bidders come back after staying away on May 13. If demand recovers, cover should climb back above 1.0× and the cut-off should ease from 19%; if caution persists, expect another undersubscription and a sticky-high one-year yield — or a government that trims the one-year offer to avoid paying up. The short end is likely to stay comfortably oversubscribed.

Offer-composition shares, seasonality, the planned-versus-actual gaps, and the ~ETB 89 billion maturity estimate are own computations. This article explains and contextualizes the auction; it is not investment advice.

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