Nigerian Treasury bills saw a rally as investors sought to fill unmet bids from the Central Bank’s recent auction. At Wednesday’s primary market auction, the Central Bank sold fewer bills than the total bids received, although it increased allocations slightly beyond the initial offer to meet some of the demand.
This strong demand kept yields on Nigerian Treasury bills stable after a recent spot rate hike. As a result of the buying momentum, the average yield experienced a contraction.
Cordros Capital Limited reported a decline in average yields across short (-1bp), mid (-4bps), and long (-2bps) segments. The firm attributed the yield contraction to investors’ preference for bills with 77-day (-1bp), 154-day (-21bps), and 350-day (-2bps) maturities.
Despite liquidity constraints that limited trading volumes, some fixed-income analysts noted a post-auction boost in trading activity, with market participants favoring mid- to long-term maturities. TrustBanc Capital Limited highlighted that investors selectively purchased at attractive levels along these maturities.
The 10-Apr maturity saw the most significant drop in yield, falling by 21bps, while the newly issued 364-day bill drew moderate bids, with its secondary market yield easing to around 22%.
Overall, the average benchmark yield dropped by 4bps, closing at 24.26%. Analysts expect this market sentiment to persist given tight liquidity conditions as investors evaluate signals from the latest auction.
In the OMO segment, buying interest in long-term papers also drove the average yield lower by 2bps to 26.4%.
