The average yield on Nigerian Treasury bills eased slightly to 17.77% in the secondary market ahead of a scheduled midweek auction by the Central Bank of Nigeria (CBN), where it plans to issue ₦220 billion across standard tenors.
Trading activity remained relatively muted as investors shifted focus to the upcoming auction, where expectations are building around possible changes to spot rates. Analysts say this is being driven by signals of potential monetary easing later in the year, alongside improving macroeconomic indicators such as disinflation, exchange rate stability, and a positive economic growth outlook.
The Nigerian government appears to be dialing back on borrowing costs as structural reforms begin to yield results. This is leading to reduced bond supply and softer spot rates on short-term debt instruments.
Market sentiment was further influenced by the CBN’s recent Open Market Operations (OMO) auction, in which ₦600 billion was offered across the 105-day and 245-day maturities. This contributed to the subdued activity in the T-bills segment.
According to a report by Cordros Capital, average yields declined by 1 basis point across the short-, mid-, and long-term ends of the curve. The modest contraction was attributed to strong demand for Treasury bills maturing in 80 days, 171 days, and 353 days—all of which recorded a 1bp drop.
On the flip side, the average yield in the OMO segment rose by 6bps to 24.7%, driven by sell pressure following the large ₦600 billion offering. The auction saw overwhelming interest, particularly in the 245-day tenor, which attracted bids worth ₦2.12 trillion. The entire allotment was made in this tenor, clearing at a marginally lower rate of 23.70%.
Market Recap: Previous Week
In the previous week, the secondary T-bills market traded with a bearish tone, pushing the average yield across the curve up by 11bps to 21.37%. Specifically, yields in both the Nigerian Treasury Bills (NTB) and OMO segments rose by 7bps and 3bps, closing at 17.77% and 24.73%, respectively.
Analysts observed that selling pressure was concentrated in the mid- and long-term maturities, with the 22-Jan bill seeing a sharp 79bps rise in yield. In the OMO market, the slight 3bps increase was largely attributed to the 19-Aug bill, which surged by 173bps as it nears maturity and pulls toward par value.
