Local investors have ramped up activity in the secondary market for Nigerian Treasury bills ahead of the Central Bank of Nigeria’s (CBN) primary market auction scheduled for Wednesday. This heightened demand caused the average yield on Treasury bills to decline by 5 basis points (bps), as market participants anticipate higher spot rates to counter the nation’s rising inflation.
Despite improved market liquidity, trading volumes remained relatively low, according to TrustBanc Limited. Investors appear focused on mitigating the adverse effects of Nigeria’s surging inflation, which recently hit 33.88%.
“The market can only compensate investors for committing funds to government securities through higher spot rates. However, there’s ongoing debate over whether the government should pay a premium on these risk-free instruments,” analysts at MarketForces Africa noted.
In a surprising move earlier this week, the Debt Management Office raised marginal rates on reopened Federal Government bonds. This has fueled expectations that spot rates for Treasury bills could also see adjustments at the upcoming auction.
In its market update, Cordros Capital Limited highlighted that yields declined across all tenures. The short (-4bps), mid (-5bps), and long (-5bps) segments of the curve experienced contractions, primarily driven by demand for bills with maturities of 80 days (-5bps), 171 days (-5bps), and 290 days (-6bps).
At AIICO Capital Limited, traders reported sell-offs in far-mid and long-term securities, including the 06 November 2025 Treasury bill. However, buying interest was concentrated in mid-to-long-dated securities, with the 4 September (-6bps) and 9 October (-5bps) papers recording the steepest yield declines. As a result, the average benchmark yield dropped by 5 bps to 24.30%.
Similarly, the average yield in the Open Market Operations (OMO) segment declined by 3 bps to settle at 26.4%.
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