Investors Take Profit in Treasury Bills after Surprise Rate Hike
The average yield jumped in the secondary market as investors reduced their Nigerian Treasury bill holdings in reaction to surprise spot rate upward adjustments and auction size.
Investors trimmed holdings in response to an adjustment to the authority’s auction calendar and the introduction of a new treasury bill offer amidst higher pricing for 364 days to maturity allotted at 17.50% at the midweek auction.
The market expects the new auction sales this week to reflect previous spot rate pricing for long tenor despite the significant liquidity level in the financial system, which was similar to the previous week.
Fixed income market analysts expressed that the bearish sentiment permeates the debt market with a spiral reduction in bonds, OMO and Treasury bills paper at the week’s close – lifting the yield curve.
Traders and investors offloaded positions on the 3-Dec Nigerian Treasury bills as the market reacted to the increase in the stop rate of the long-dated bill.
Across segments, average treasury bills yield climbed by 14 basis points to 16.98.0% while average OMO yields increased by 15bps to 22.0%, according to Cordros Capital Limited.
Last week, trading activities began on a calm note as investors focus on the mid-week auction where the Central Bank floated Nigerian Treasury bills worth ₦700 billion.
The auction eventually cleared higher with an allotment of ₦709.6 billion from a subscription of ₦774.8 billion, while the stop rate on the 354-days tenor increased by 146bps to 17.50% from 16.04% at the previous auction
During the week, the DMO revised its Q4-2025 treasury bills auction calendar, implementing two key adjustments. First, an additional auction has been scheduled for Wednesday, December 10.
Details indicates that the CBN will offer N750.00 billion, comprising N100.00 billion for the 91-Day, N150.00 billion for the 182-Day, and N500.00 billion for the 364-Day.
Second, the offer size for the December 17 auction has been increased from N365.00 billion to N700.00 billion, made up of N100.00 billion for the 91-Day, N100.00 billion for the 182-Day, and N500.00 billion for the 364-Day.
Analysts at Cordros Capital Limited anticipate that robust liquidity inflows will strengthen demand for bills, exerting downward pressure on yields.
At the same time, investor attention is likely to centre on the ad hoc auction scheduled for December 10, as market participants assess potential yield cues and near-term issuance posture.
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