The Nigerian Treasury Bills (NTB) market witnessed a strong rally last week as average yields dropped by 12 basis points (bps) in the secondary market amid rising demand for naira-denominated assets.
Investor sentiment remained upbeat, buoyed by abundant liquidity in the financial system and growing anticipation of the Central Bank of Nigeria (CBN)’s Q4 Treasury auctions.
Market analysts at Cowry Asset Management reported that investors poured funds into short-, medium-, and long-term tenors, driving average yields down by 12 bps week-on-week to 17.93%.
Following the CBN’s recent monetary policy easing in September, market participants are positioning for potential repricing of Treasury bill offerings. The yield slump was further reinforced by excess liquidity levels, which soared to ₦7.1 trillion last week, alongside a stable naira and easing inflationary pressures.
Fixed-income traders observed that investors have been actively rotating their portfolios to capture liquidity-driven opportunities. Interest in selected maturities rebounded after an earlier sell-off on the 03-Sep-2026 paper, which saw yields tick up by 18 bps before declining again by midweek.
By Wednesday, bullish momentum returned, pushing yields on longer-dated papers lower—03-Sep-2026 closed at 15.80% and 17-Sep-2026 at 15.35%. The 07-Jul OMO bill also saw heightened activity as investors chased returns amid a liquidity-rich environment.
The rally in T-bills underscores renewed appetite for fixed-income assets as investors seek safety in short-term instruments. During the latest CBN OMO auction, total bids reached a staggering ₦3.32 trillion, though the apex bank allotted just ₦98 billion—far below the ₦600 billion on offer—signaling cautious liquidity control.
OMO bills with 88-day maturity received no allotments, while 102-day and 123-day maturities cleared slightly higher at 20.49% and 20.61%, respectively. Analysts interpret the limited allotment as the CBN’s deliberate attempt to manage excess liquidity without flooding the market.
Light trading was observed in select papers, including the 16-Dec, 3-Mar, and 2-Jun bills, as investors awaited clearer direction from the apex bank’s short-term liquidity management strategy.
With liquidity still abundant, analysts expect yields to remain under pressure in the near term as market players continue to position for upcoming auctions and monetary policy cues.
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