Nigerian T-Bills Yield Falls in Post-Auction Action, Liquidity
The average yield on Nigerian Treasury bills eased by 2 basis points in the secondary market to 17.82%, fixed income market analysts said in their latest updates.
The short-term investment instrument returns continue to exceed inflation, with real returns widening due to monetary policy tightening.
The market witnessed renewed demand after tepid allotment at the primary market auction conducted on Wednesday. The Central Bank of Nigeria floated N400 billion in Treasury bills, which received subscriptions totalling N3 trillion.
Despite a heightened appetite for the naira curve, 77% of the subscriptions recorded were refunded. Hence, failed bids at the auction filtered into the secondary market, driving bullish activity.
The rally was also supported by about N9 trillion in excess liquidity in the financial system. Banks are reported to allocate free cash between buying Treasury bills and the Standing Deposit Facility.
Due to the buying momentum, the average yield declined by 2bps to 17.82%. Buying interest was concentrated in the Feb-27 (-31bps), Sep-26 (-27bps), Mar-27 (-24bps and -10bps), and Oct-26 (-11bps) papers.
On the flip side, selling pressure was limited to the May-26 (+37bps and +13bps) and Jun-26 (+13bps) maturities. Excess Liquidity in Banking System Surges Near N9trn
