Yields on Nigerian Treasury Bills (NTBs) and Open Market Operation (OMO) bills surged in the secondary market last week following a wave of selloffs by banks and asset managers, causing a shift in recent bullish trends.
Cordros Capital Limited reported an average yield increase of 9 basis points (bps), closing at 25.9% across all instrument’s week-on-week, reversing the four-day rally seen earlier.
In the NTB segment, yields rose by 4bps to 24.2%, while the OMO bills segment saw an 11bps uptick, closing at 26.2%, according to Cordros Capital’s analysis. Traders noted that demand eased significantly by the week’s end, particularly for bills with mid-range maturities, prompting some market players to take advantage of attractive rates amidst improved liquidity conditions. TrustBanc Capital Limited observed significant yield declines on specific maturities, with the 6-Mar and 10-Apr papers falling by 46bps and 107bps, respectively, although selling pressure remained on the 6-Feb maturity.
The Central Bank of Nigeria (CBN) is set to conduct a primary market auction midweek to refinance maturing NTBs worth ₦513.43 billion, a move expected to shape the yield trajectory further. Market analysts anticipate a cautious stance until the auction’s results are revealed, which could offer additional insights into upcoming rate directions.
In October, the CBN offered ₦456.6 billion across two auctions, a 26.7% drop from the previous month, per Afrinvest Capital Limited. Demand at the first auction was especially strong, with investor interest skewed towards long-term bills at a bid rate of 8.2x the offer. The bank sold NTBs at 17.0% for 91-day bills, 17.5% for 182-day bills, and 19.9% for 364-day bills, slightly adjusting the long-end stop rate from 20.0%.
The final auction of October reflected a shift, with stronger offers totaling ₦374.7 billion and demand at a more moderate 1.3x. The auction cleared at elevated stop rates of 17.8% for 91-day, 19.2% for 182-day, and 26.0% for 364-day bills, aligning the CBN’s allotments with total bids.
The midweek auction’s outcome is likely to provide crucial direction for Nigeria’s fixed-income market, as traders and investors watch for signals on yield sustainability amid evolving liquidity and economic conditions.
