In the lead-up to this week’s anticipated inflation data release, the yield on Nigerian Treasury Bills (NTBs) saw a steep decline across all standard maturities within the secondary market. This shift comes as analysts forecast a slowdown in headline inflation, influenced by the rebasing of the consumer price index during Q2 2025. Market participants are also eyeing potential monetary policy easing in the latter half of the year.
With the federal government tightening control over the issuance of Treasury instruments, including local bonds, market observers anticipate rising demand in the secondary market. This growing appetite is likely to drive yields further downward, although prolonged dips could heighten the risk of capital flight from domestic instruments.
Investor optimism has been largely sustained by the Q3 borrowing schedule, recently unveiled by the Debt Management Office, which indicated a marked reduction in expected borrowings. This move has intensified secondary market activity, setting the tone ahead of the NTB auction held this past Wednesday.
At that auction, the one-year stop rate plunged by a notable 254 basis points, landing at 16.30%, a reflection of overwhelming demand. The enthusiasm that sparked the week’s opening session—centered on the 9 October 2025 bill—carried through the week, with pronounced interest in medium to long-term bills.
Asset managers, banks, and institutional investors ramped up their purchases of naira-denominated assets, driving yields further down amid a supply squeeze that deviates sharply from earlier patterns in the debt market. The Nigerian Interbank Treasury True Yield (NITTY) curve mirrored this trend, recording a widespread drop in yields. According to Cowry Asset Management Limited, the average yield across the curve sank by 156 basis points to close at 18.35%.
During the CBN’s NTB auction, the apex bank offered N250 billion across standard tenors, but demand far outpaced supply. Bids totaled N1.33 trillion, although only N201.82 billion was allotted. Notably, the 364-day bill dominated the auction, garnering N1.18 trillion in subscriptions, with N126.31 billion eventually allocated. The bid-to-cover ratio for this tenor reached 6.59x—slightly lower than the 7.61x seen at the prior auction, yet still robust.
Yields across all bill durations fell significantly. The 91-day instrument was allotted at 15.74%, down from 17.80% in the previous auction. Similarly, the 182-day and 364-day instruments cleared at 16.20% and 16.30%, respectively, compared to 18.35% and 18.84% earlier.
Market analysts speaking to MarketForces Africa expect a blend of bullish and neutral trends to continue, driven by ample system liquidity and cautious optimism regarding inflation trajectory and potential monetary policy shifts.
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