The average yield on Nigerian Treasury Bills has slightly declined to 20% in the secondary market due to rising demand, analysts reported. Investors are increasingly showing interest in naira-based assets as the benchmark interest rate now exceeds inflation, allowing them to earn real returns on their investments.
With expectations of a policy shift, investors in fixed-income securities are taking advantage of positive returns in the debt market to grow their portfolios. Financial analysts predict that yields may continue to decline in the first quarter of 2025.
Despite a cash deficit in the financial system ahead of the Federal Government of Nigeria (FGN) bond settlement, the market remained strong. Buying activity spanned across short-, mid-, and long-term securities, leading to a slight decline in yields ahead of the next Treasury bill auction.
The longest-term Treasury bills, especially those maturing in January and February, attracted the most interest. However, limited supply meant only a few transactions were successfully executed as traders sought to capitalize on market conditions.
As a result, the average yield dropped by 3 basis points (bps) to 20.0%. Across different maturity periods, short-term yields fell by 1 bp, mid-term by 1 bp, and long-term by 5 bps, according to a report from Cordros Capital Limited.
The drop in yield was largely driven by demand for Treasury bills maturing in 86 days (-1 bp), 177 days (-1 bp), and 331 days (-49 bps). Similarly, in the Open Market Operations (OMO) segment, the average yield fell by 230 bps to 22.6%.
