Yields on Nigerian Treasury bills fell to an average of 20.93% in the secondary market on Tuesday, as investor demand increased ahead of the Central Bank of Nigeria’s (CBN) primary market auction (PMA) scheduled for Wednesday.
Despite recent fluctuations in spot rates and widening real return gaps following signs of disinflation, investors continued to favour naira-denominated assets. Trading activity showed renewed interest in shorter-tenor instruments, particularly papers maturing in March and April, prompting a 10 basis point drop in average yields.
The CBN is set to auction ₦550 billion worth of Treasury bills as part of its ongoing liquidity management strategy. Recent aggressive Open Market Operations (OMO) auctions have already tightened financial system liquidity, impacting market sentiment.
Early trading on Tuesday was bearish as investors reacted to the OMO auction announcement, prompting holders of Treasury bills to offload positions in anticipation of Wednesday’s PMA. However, demand remained relatively soft, limiting broader market movement.
According to analysts at Cordros Capital, average yields across the Treasury yield curve declined slightly at the short (-1 basis point), mid (-1bp), and long (-18bps) ends. This trend was driven by demand for the 16-day (-2bps), 170-day (-1bp), and 247-day (-106bps) maturities.
In contrast, the OMO segment saw yields rise by 2 basis points to 27.0%, reflecting investor caution and tighter market conditions.
