Nigerian Treasury Bills Return Shrinks in Post-Auction Rally
The average yield on Nigerian Treasury bills fell by 9 basis points in the secondary market, driven by sustained investor interest in the naira asset following the Apex Bank’s rejection of excess bids at the main auction last week.
Investors continue to lock in yields due to successive yield repricing at the Treasury bill auction, supported by disinflation and a positive real return on investment.
On Monday, the Treasury bills market closed bullish, with the average yield decreasing by 9bps to 17.67%. Buying interest was more pronounced at the short, belly, and long ends of the curve.
Investor sentiment was clearly positive across the board, as all instruments saw about 2-3 bps of yield moderation, except for the Dec 2026 maturity treasury bills (-82bps), Jan-2027 (-49bps), and Mar-2027 (-9bps) paper, which experienced higher demand pressure.
Traders reported notable yield contractions on the 10-DEC (-82bps), 17-DEC (-83bps), and 21-JAN (-49bps) papers. Meanwhile, the Feb-2027 (+7bps) recorded the only selloff in today’s session.
As a result, the long end (-16bps) of the curve witnessed the most contraction, while the short and mid segments both contracted by 2 bps each. Consequently, the average yield declined by 9 bps to 17.67%
At the main auction held last week, demand was stronger, supported by robust liquidity in the financial system. The Central Bank offered N400 billion across three tenors: N100.00bn each for the 91-day and 182-day bills, and N200.00bn for the 364-day bill.
Total subscriptions surged to N2.89 trillion, with significant concentration in the one-year instrument, which alone attracted N2.73 trillion
Market conditions improved markedly, with bid-to-cover and bid-to-offer ratios rising to 5.56x (vs 4.43x previously) and 7.23x (vs 2.92x previously), respectively.
Stop rates on the short-tenor bills remained unchanged at 15.95%, while the 182-day and 364-day papers cleared at 16.42% p.a. (-20bps) and 16.43% p.a. (-20bps), respectively.
In the secondary market, sentiment was mixed. Average T-bill yields rose by 6bps to 17.76% p.a., with the short, mid, and long ends of the curve increasing by 2bps, 12bps, and 12bps, respectively.
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