The average yield on Nigerian Treasury bills declined in the secondary market after the Central Bank of Nigeria (CBN) rejected excess subscriptions worth N1.071 trillion at last week’s primary market auction.
Following the rejection, investors whose bids were unsuccessful shifted focus to the secondary market, intensifying demand for Treasury instruments. This heightened activity pulled average yields down by 13 basis points to 20.5%, according to a market note by Cordros Capital Limited.
At the auction, the CBN offered a total of N162.02 billion across three tenors:
- 91-day bills: N22.02 billion
- 182-day bills: N40.00 billion
- 364-day bills: N100.00 billion
Despite total subscriptions reaching N1.23 trillion—lower than the N1.31 trillion recorded in the previous auction—the bid-to-offer ratio surged to 7.6x, up from 2.9x. The CBN allotted the exact amount offered, with N37.98 billion for the 91-day, N40.54 billion for the 182-day, and N83.50 billion for the 364-day tenors.
Yields dropped across the board:
- 91-day bill: 17.80% (down 18 bps)
- 182-day bill: 18.35% (down 15 bps)
- 364-day bill: 18.84% (down 51 bps)
In addition, the apex bank conducted an OMO auction offering N600 billion split evenly between 155-day and 204-day bills. The auction attracted strong interest, with N1.15 trillion in subscriptions, translating to a 1.9x bid-to-offer ratio. The CBN eventually allotted N1.07 trillion at stop rates of 24.20% and 24.59%, respectively.
However, in the secondary market, yields on OMO bills climbed 75 basis points to 26.7% as investors offloaded positions to participate in the high-yielding OMO auction.
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