Nigerian Treasury Bills Yield Declines to 17.6%
Trading in Nigerian Treasury bills was robust, characterised by targeted demand primarily focused on the mid-section of the yield curve in the secondary market.
Inflation-protected returns continue to attract local and foreign portfolio investors (FPISs) to naira assets, with sustained demand seen across fixed interest securities.
The average yields declined by 65 basis points week-on-week to close at 17.62%, supported largely by bank balance sheet flows rather than structural asset reallocation, said Cowry Asset Management Limited.
Trading began the week on a quiet and neutral footing, with muted activity across all maturities keeping yields largely flat across the curve. By midweek, market participants’ attention shifted to the treasury bill auction.
By Thursday, the market turned broadly bullish in reaction to the auction outcome, driving stronger demand and widespread yield declines across the curve. Short-, mid-, and long-tenor bills recorded notable yield compression.
Bullish sentiment was sustained through the end of the week, with demand skewed toward mid- to long-dated instruments. The newly issued long-dated bill (04-Feb-26) remained actively traded, settling around 15.80%.
Analysts noted that the primary market auction reinforced the strength of demand. The Central Bank of Nigeria (CBN) offered N1.15 trillion across the standard 91-day, 182day, and 364-day tenors, an amount above the N668.86 billion of maturing bills during the same period.
Total subscriptions reached N4.59 trillion, significantly higher than the prior auction, with approximately 96% of bids directed toward the 364-day instrument.
The CBN allotted N952.6 billion, below the offer size, producing a bid-to-cover ratio of 4.81 times and a sales-to-offer ratio of 0.83 times.
Stop rates on the 91-day and 182-day bills were held steady at 15.84% and 15.65%, while the 364-day stop rate declined sharply by 137 basis points to 16.99%.
This outcome highlights the dominance of liquidity-driven duration demand, while the partial allotment suggests continued rate discipline by the monetary authority.
The investment firm said Treasury bill yields, especially in the six- to twelve-month segment, could remain under downward pressure.
Nonetheless, the current yield compression should be interpreted as cyclical and liquidity-induced rather than indicative of a policy easing cycle. A reversal would likely require sizable OMO issuance, FX-related sterilization, or liquidity absorption, Cowry Asset stated. Sanwo-Olu Seeks Collaboration to Position Lagos as Financial Hub
