The average return on Nigerian Treasury bills has fallen to 17.67%, as investors pivot toward fixed-income securities in response to the Central Bank of Nigeria’s (CBN) reduction in spot rates during its latest primary market auction.
At the recent auction, the apex bank offered N290 billion worth of Treasury bills across the standard 91-day, 182-day, and 364-day tenors. The distribution included N50 billion for 91-day bills, N20 billion for 182-day papers, and N220 billion allocated to the longer 364-day notes.
Despite this issuance, total subscriptions came in at N675.66 billion—down sharply from the N1.33 trillion worth of bids received in the previous auction. This represents a significant dip in investor enthusiasm, as reflected in a reduced bid-to-offer ratio of 2.3x compared to 6.6x earlier.
CBN fully allotted the offered amount, disbursing N13.11 billion, N5.10 billion, and N271.79 billion across the respective tenors. Spot rates were slashed across the board: the 91-day paper settled at 15%, a 74 basis point drop; the 182-day bill was allotted at 15.50%, down 70 basis points; while the 364-day tenor came in at 15.88%, from a prior 16.30%.
With demand overshooting supply, unmet bids spilled into the secondary market, driving yields downward across all segments of the curve. The average yield declined by 12 basis points to 17.76%, as a risk-off sentiment prevailed following the CBN’s dovish stance at the last Monetary Policy Committee (MPC) meeting.
Secondary market trading reflected bullish activity, as investors repositioned for more attractive naira-denominated assets. This optimism was echoed in the Open Market Operations (OMO) segment, where yields eased to 24.7%.
Analysts suggest that the decline in available instruments, combined with a robust liquidity environment, could drive further reductions in Treasury bill yields. Market participants anticipate more rate adjustments as the bullish trend continues to dominate the fixed income space.
