Treasury Bills Yield Rises as Investors React to Rates Hike
The average benchmark yield on Nigerian Treasury bills rose by 50 basis points to 18.17% in the secondary market as fixed-income market investors took profit on naira assets following an increase in spot rates at the midweek auction.
Sell pressure surfaced after the Apex Bank increased spot rates on Treasury bills across the standard tenors on Wednesday. Initially, ample system liquidity supported early demand, before profit-taking and rising supply concerns gradually dampened early buying interest.
At the beginning of the week, AIICO Capital Limited reported that trading was modestly bullish, with strong demand for mid- to long-term treasury bills driving slight yield compression.
As the week progressed, sentiment turned cautious as investors positioned ahead of the Q1 issuance calendar and shifted attention to the CBN’s first OMO auction in 2026.
The CBN floated N600 billion in OMO bills for subscription as part of efforts to manage excess liquidity in the financial system last week.
The monetray authority mopped up N2.71 trillion across the 161-day and 210-day tenors allotment to investors at stop rates of 19.34% and 19.40%, respectively. Investors traded cautiously after the auction.
Trading activities slowed down as market participants largely stayed on the sidelines ahead of the midweek treasury bills auction, although selective buying interest remained in a few instruments.
The CBN opened N1.15 trillion Treasury bills for subscription across standard tenors. Total subscription reached N1.54 trillion. Total allotment settled at N1.14 trillion, with 364 days bills accounting for the largest chunk.
Rates on these tenors were increased. Stop rates settled at 15.80% (91-day), 16.50% (182-day), and 18.47% (364-day), translating to effective yields of 16.48%, 18.17%, and 22.63%, respectively. Post-auction activity improved, focusing on the new one-year bill and shaped by the Q1 auction calendar
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