By Boluwatife Oshadiya | June 1st, 2026
Key Points
- Average Treasury bill yield declined six basis points week-on-week to 17.51%
- Strong liquidity and aggressive investor positioning supported demand for government securities
- Market participants remain attracted to Treasury bills despite moderating real returns
Main Story
Average yields on Nigerian Treasury bills eased to 17.51 per cent last week as banks, asset managers and other institutional investors increased their exposure to government securities amid abundant liquidity in the financial system.
Market data showed the average benchmark yield declined by six basis points week-on-week, driven largely by sustained buying interest across key maturities.
Analysts attributed the development to strong liquidity conditions, with financial system liquidity rising to approximately N6.02 trillion, partly supported by increased placements at the Central Bank of Nigeria’s Standing Deposit Facility.
Trading activity was concentrated around mid-tenor instruments, where demand pushed yields lower on Treasury bills maturing on December 3, December 10 and December 17, 2026.
However, some profit-taking activity emerged at the longer end of the curve, causing yields on March 2027 maturities to increase modestly.
The decline in yields comes despite expectations that inflation could rise further, while the Central Bank maintains its benchmark interest rate at 26.5 per cent.
The Issues
Nigeria’s fixed-income market continues to benefit from a high-interest-rate environment, although real returns have narrowed as inflation remains elevated.
For institutional investors, Treasury bills remain attractive due to their low-risk profile, liquidity and yields that continue to outperform inflation-adjusted returns available in several competing markets.
What’s Being Said
“Investors continued to position aggressively amid elevated system liquidity,” traders familiar with market activity said.
“Trading was concentrated at the belly of the curve, where buying interest drove yields lower across key maturities,” market participants noted.
What’s Next
- Investors will monitor upcoming Treasury bill auctions for signals on government borrowing costs
- Inflation data will remain a key factor influencing fixed-income market sentiment
- The Central Bank’s next monetary policy decisions could determine the direction of yields in the second half of the year
Bottom Line
The Bottom Line: Strong liquidity and persistent institutional demand continue to support Nigeria’s Treasury bill market. Unless inflation accelerates significantly or monetary policy shifts unexpectedly, yields are likely to remain relatively stable in the near term while investors seek safety and predictable returns.
