The Nigerian Treasury bills market experienced a slight drop in yields as investors maintained a cautious stance ahead of the CBN’s N290 billion primary market auction set for Wednesday.
In the secondary market, trading activity reflected investor conservatism, as monetary policy rates were left unchanged by the apex bank. Despite divergent projections from analysts, the CBN’s steady policy stance has kept real returns on naira-denominated assets above the 5% mark, providing a supportive environment for rate repricing.
These favorable conditions—coupled with improved macroeconomic indicators—have pushed discount rates on naira assets lower. Government borrowing costs are also adjusting to these realities. With domestic bond issuance scaled back by the Debt Management Office, the government is increasingly looking abroad to finance fiscal gaps.
Cordros Capital Limited noted a bullish close in the Treasury bills market on Tuesday, as average yields contracted by 17.1%. Yield compression was recorded across all segments of the yield curve: short (-1 bp), mid (-5 bps), and long-term maturities (-6 bps). The repositioning trend suggests heightened interest ahead of the midweek auction.
Investor demand surged for NTBs maturing in 79 days, driving a -1 bp decline in their yield. Strong buying pressure also emerged for bills maturing in 170 and 184 days, with respective yield contractions of -15 bps and -48 bps.
In the Open Market Operations (OMO) segment, investor sentiment remained mildly positive, with average yield dropping by 1 basis point to 24.6%.
Analysts from various investment firms foresee muted activity in the secondary market in the near term, as investor attention remains firmly fixed on the upcoming NTB auction.
