Yields on Nigerian Treasury bills and OMO instruments declined last week, driven by investor demand in the secondary market after unmet bids at primary auctions.
The Central Bank of Nigeria (CBN) offered Open Market Operation (OMO) bills targeted at banks and foreign portfolio investors, alongside Nigerian Treasury bills, as part of efforts to regulate financial system liquidity. These issuances coincided with growing interest in naira-denominated assets ahead of the April inflation data release.
Following the auctions, secondary market activity picked up modestly, particularly in the newly issued 1-year treasury bills and OMO papers with January to April maturities. As participants moved to fill their rejected bids in the primary auction, average yields across fixed-income instruments declined by 18 basis points to 23.5%.
Cordros Capital Limited stated in an investor note that average yields in the Treasury bills segment fell by 10 basis points to 21.0%, while OMO bill yields dropped by 18 basis points to 26.9%.
At the midweek auction, the CBN offered N550 billion worth of Treasury bills, divided into N50 billion for the 91-day tenor, N100 billion for the 182-day, and N400 billion for the 364-day maturity.
Total demand settled at N1.09 trillion, down from N1.54 trillion at the previous auction, reflecting a lower bid-to-offer ratio of 2.0x, compared to 3.9x earlier.
Despite reduced interest, the CBN allotted a total of N598.33 billion, with N77.22 billion allocated to the 91-day, N38.49 billion to the 182-day, and N482.62 billion to the 364-day maturities.
Auction results showed that the stop rate for the 91-day bills remained unchanged at 18.00%, while the 182-day instrument was priced at 18.50%. The 364-day tenor saw a marginal increase of 3 basis points, closing at 19.63%.
Additionally, the apex bank conducted an OMO auction on Tuesday, offering N500 billion across standard maturities. The offer was split into N250 billion for the 315-day and another N250 billion for the 329-day maturities.
Subscription at the auction reached N773.74 billion, resulting in a bid-to-offer ratio of 1.5x. The CBN allotted N756.74 billion, including N40.35 billion in the 315-day and N716.39 billion in the 329-day maturities.
