Yields on Nigerian Treasury bills declined sharply last week as sustained investor demand, particularly in the mid-section of the yield curve, drove bullish sentiment across the secondary market.
Trading activity remained robust, supported by a combination of domestic liquidity and foreign portfolio interest seeking inflation-adjusted returns on naira-denominated assets. Demand was most pronounced among mid- to long-tenor instruments.
According to Cowry Asset Management Limited, the average yield on Treasury bills fell by 65 basis points week-on-week, closing at 17.62%. The firm attributed the decline largely to balance sheet-driven bank flows rather than any broad structural shift in asset allocation.
Market activity opened the week on a relatively subdued note, with yields largely unchanged across maturities amid muted trading. Momentum began to build midweek as attention turned to the scheduled primary market auction.
By Thursday, sentiment turned decisively bullish following the auction results, triggering a wave of buying interest that pushed yields lower across short-, medium- and long-dated bills. Yield compression was most visible in the mid-curve, where investor appetite remained strongest.
The positive tone persisted through the close of the week, with traders concentrating on longer-dated securities. The newly issued 04-Feb-26 Treasury bill emerged as one of the most actively traded instruments, with yields settling around 15.80%.
The strength of demand was reinforced at the primary market auction, where the Central Bank of Nigeria (CBN) offered N1.15 trillion across the 91-day, 182-day and 364-day tenors. This exceeded the N668.86 billion in bills that matured during the same period.
Investor subscriptions surged to N4.59 trillion, significantly above levels recorded at the previous auction. Approximately 96% of total bids were concentrated in the 364-day tenor, underscoring the market’s preference for longer-duration exposure.
Despite the strong demand, the CBN allotted N952.6 billion, below the total offer size. This resulted in a bid-to-cover ratio of 4.81 times and a sales-to-offer ratio of 0.83 times.
Stop rates on the 91-day and 182-day bills were maintained at 15.84% and 15.65%, respectively, while the stop rate on the 364-day bill dropped by 137 basis points to 16.99%.
Cowry Asset Management noted that the auction outcome reflects liquidity-driven demand for duration, while the partial allotment suggests continued rate management discipline by the monetary authority.
Looking ahead, the firm expects Treasury bill yields, particularly within the six- to twelve-month maturity range, to remain under downward pressure. However, analysts cautioned that the current yield compression should be viewed as cyclical and liquidity-induced, rather than a signal of an imminent policy easing cycle.
A reversal in yield trends, they noted, would likely depend on factors such as large-scale Open Market Operations (OMO) issuance, foreign exchange-related liquidity sterilisation, or other measures aimed at absorbing excess system liquidity.
