Yields on Nigerian Treasury bills moved higher in the secondary market last week as investors reacted to increased spot rates and recalibrated positions following policy actions by the Central Bank of Nigeria (CBN).
Market data showed that the average benchmark yield on Treasury bills rose by 50 basis points to 18.17%, driven largely by profit-taking on naira-denominated assets after the CBN raised stop rates at its midweek primary market auction.
Selling pressure intensified after the apex bank increased spot rates across all standard Treasury bill tenors on Wednesday. Although system liquidity remained relatively ample at the start of the week, supporting early demand, investor sentiment gradually shifted as supply concerns emerged and profit-taking activity picked up.
According to AIICO Capital Limited, trading opened the week on a modestly bullish note. Strong investor demand for mid- to long-term Treasury bills initially led to mild yield compression, reflecting confidence in fixed-income instruments amid elevated interest rate levels.
However, market sentiment turned more cautious as the week progressed. Investors began positioning ahead of the first-quarter issuance calendar, while attention shifted to expectations surrounding the CBN’s first Open Market Operations (OMO) auction of 2026.
As part of its liquidity management strategy, the CBN floated ₦600 billion worth of OMO bills for subscription during the week. The move was aimed at mopping up excess liquidity in the banking system and reinforcing monetary tightening efforts.
At the auction, the monetary authority absorbed ₦2.71 trillion through allotments across the 161-day and 210-day tenors. Stop rates for these instruments settled at 19.34% and 19.40%, respectively. Following the auction, investor activity remained cautious as participants assessed the implications of the higher rates.
Secondary market trading slowed noticeably ahead of the midweek Treasury bills auction, with many investors adopting a wait-and-see approach. Despite the subdued activity, selective buying interest persisted in a limited number of instruments, particularly those offering attractive yields relative to risk.
During the primary auction, the CBN offered ₦1.15 trillion worth of Treasury bills across the standard 91-day, 182-day, and 364-day tenors. Total investor subscription exceeded expectations, reaching ₦1.54 trillion, while total allotment stood at ₦1.14 trillion. The one-year bill accounted for the largest share of the allotment.
Stop rates were raised across all maturities, reflecting the CBN’s tightening stance. The 91-day bill cleared at 15.80%, the 182-day at 16.50%, and the 364-day at 18.47%. These translated into effective yields of 16.48%, 18.17%, and 22.63%, respectively.
Following the auction, activity in the secondary market improved, with trading concentrated around the newly issued 364-day bill. Market direction was largely shaped by expectations surrounding the first-quarter auction calendar and evolving interest rate dynamics.
Analysts expect Treasury yields to remain sensitive to liquidity conditions, inflation expectations, and further policy signals from the CBN, as investors continue to balance yield opportunities against duration and reinvestment risks.
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