Yields on Nigerian Treasury bills slipped marginally as strong demand for the naira continued to dominate activity in the secondary market, reshaping investor expectations around possible rate cuts in the near term.
Market analysts told BizWatch Nigeria that investors have been expanding their positions in Treasury instruments despite the sizable volume of auction supply seen in recent weeks. Banks, in particular, are ramping up exposure to interest-bearing securities in an effort to strengthen earnings.
The ongoing rally in Treasury bill instruments has also been fuelled by excess liquidity circulating within the financial system. Fixed-income experts noted that yields on Nigerian Treasury bills are likely to maintain a downward trajectory throughout the fourth quarter, supported by easing inflation and a firmer naira, which continue to enhance appetite for short-dated government securities.
Last week, bullish sentiment dominated the Treasury bill market, aided by strong system liquidity and growing expectations of a rate cut following Nigeria’s October inflation print of 16.05% year-on-year, down from 18.02% in September.
Cordros Capital reported that average yields across the entire Treasury bills curve fell by 23 basis points week-on-week to 19.1%. Segment-wise, Nigerian Treasury bills yields dropped by 3 basis points to 17.0%, while OMO yields declined by 26 basis points to settle at 21.5%.
During the most recent primary market auction, the Central Bank of Nigeria (CBN) floated a total of N700 billion worth of Treasury bills—N100 billion for 91-day paper, N150 billion for 182-day, and N450 billion for 364-day instruments.
Demand remained extremely strong, with total subscriptions reaching N1.29 trillion, significantly above the amount on offer. Ultimately, the CBN allotted N1.09 trillion at unchanged stop rates of 15.30%, 15.50%, and 16.04%, reflecting sustained investor confidence at current pricing levels.
MarketForces Africa also reported that the CBN launched an OMO auction on Tuesday, offering N600 billion across the 173-day and 182-day papers. The auction attracted N3.77 trillion in bids, with N2.98 trillion allotted, representing a bid-to-cover ratio of 1.3x. OMO bills with 173 days to maturity cleared at 20.54%, while the 182-day tenor was priced at 20.55%.
A second OMO auction conducted the next day featured another N600 billion in offer across 174-day and 188-day maturities, with N903.35 billion allotted at stop rates of 20.45% and 20.54%, respectively.
Fixed-income analysts at Cordros said next week’s market performance will be influenced by the outcome of the Monetary Policy Committee (MPC) meeting scheduled for November 24–25, where they expect a further 100 basis-point reduction in the MPR to 26.0%.
Cowry Asset analysts added that liquidity conditions are expected to remain slightly positive due to an OMO maturity of N489.37 million and coupon inflows of N15 billion from FGN bonds.
Despite that, the Treasury bill market may open slightly bearish as investors adjust to last week’s yield movements, particularly in the absence of fresh primary market issuance.
With month-end drawing closer, portfolio managers may become more active in the mid-curve—especially on March and April maturities—as they position for liquidity needs tied to cyclical cash demands.
