By Boluwatife Oshadiya | May 22, 2026
Key Points
- Nigerian Treasury bill yields declined after unmet auction bids shifted demand to the secondary market
- Average secondary market yield fell by 3 basis points to 17.46%
- Investor demand remained strongest on mid-to-long tenor Treasury bills following the CBN’s midweek auction
Main Story
Nigeria’s Treasury bills market closed on a bullish note on Thursday as investors intensified buying activity in the secondary market following the Central Bank of Nigeria’s (CBN) latest primary market auction.
The rally came after the apex bank made slight adjustments to spot rates across select maturities at the midweek Treasury bills auction, triggering renewed demand from investors whose bids were not fully allotted.
Average yields at the mid and long ends of the curve declined by four basis points and three basis points respectively, while the overall average Treasury bills yield eased by three basis points to 17.46%.
Market activity showed strong investor interest in specific maturities, particularly the 25-MAR bill, which recorded a 31-basis-point yield decline. The 5-NOV and 3-DEC papers also saw notable demand, with yields falling by 15 basis points and 13 basis points respectively.
Analysts said the secondary market rally was largely driven by excess liquidity from unsuccessful bids at the primary auction, where total subscriptions reportedly approached ₦2 trillion. However, less than half of the bids were allotted by the CBN, leaving investors searching for alternatives in the secondary market.
The apex bank adjusted rates on short- and long-dated papers at the auction while maintaining the stop rate on the 182-day Treasury bill.
Traders noted that activity at the short end of the curve remained relatively stable, while moderate yield compressions were recorded across mid-to-long tenors amid balanced system liquidity and cautious investor positioning.
The Treasury bills market has remained attractive to institutional investors in recent months as elevated yields continue to offer a hedge against inflation and currency volatility.
The Issues
The latest Treasury bills rally highlights the persistent liquidity pressure within Nigeria’s fixed-income market and growing investor preference for risk-free government securities.
With inflation still elevated and private sector borrowing costs rising, banks, pension funds and asset managers have increasingly concentrated portfolios around sovereign debt instruments offering double-digit returns.
The market’s heavy oversubscription at the primary auction also reflects sustained investor appetite despite recent moderation in yields. Analysts say the CBN’s cautious rate adjustment signals an attempt to balance inflation management with debt servicing costs.
At the same time, tighter liquidity conditions and the continued use of aggressive monetary policy tools have reduced access to cheaper funding across the broader economy, placing additional pressure on businesses seeking credit.
What’s Being Said
“The decline in yields reflects the reinvestment of unmet auction demand into the secondary market, particularly around the one-year segment where investors continue to seek attractive real returns,” said analysts at Lagos-based investment research firms monitoring the fixed-income market.
“Liquidity remains relatively balanced, but investor appetite for sovereign instruments is still strong because Treasury bills continue to provide one of the safest inflation hedges in the market,” said fixed-income traders familiar with Thursday’s market activity.
The CBN has repeatedly maintained that its monetary tightening stance is necessary to stabilise prices, support the naira and contain inflationary pressures across the economy.
What’s Next
- Investors are expected to closely monitor liquidity levels ahead of the next Treasury bills auction cycle
- Attention is likely to remain focused on the one-year paper, which continues to attract the strongest demand
- Analysts will also watch for any further adjustments to stop rates as the CBN balances inflation concerns with borrowing costs
The Bottom Line: Nigeria’s Treasury bills market remains heavily supported by strong institutional demand and limited supply dynamics. The latest rally suggests investors still view sovereign fixed-income securities as one of the most attractive defensive assets in the current high-inflation environment.
