Nigerian Treasury Bills Rally as CBN Reprices Spot Rates
The average yield on Nigerian Treasury Bills moderated as fixed-income investors piled into positions amid spot-rate repricing across standard tenors on new issuance.
Traders reported that buying interest prevailed in the secondary market last week, particularly across the short and mid-segments of the yield curve.
Investment firms reported that the long end witnessed some profit-taking and selling pressure.
Consequently, the average market yield fell 6bps week-on-week to 17.90%, reflecting stronger demand for selected instruments amid abundant system liquidity, Cowry Asset Limited told investors in a note.
The Treasury bills with a Sept 23 2027 expiration were quoted at an offer yield of 16.00%, while the 7 October NTB was offered at 15.60%, Herwood Securities Limited reported.
In the OMO segment, the 8 December OMO was offered at 18.60%, while the 12 January and 26 January OMOs were offered at 17.50% and 17.40%, respectively, the investment firm said.
Fixed income analysts said the 20 April OMO was quoted at 17.15%/17.05% bid/offer, while the 22 June OMO was offered at 16.20%.
Overall, trading activity was relatively active, with market participants showing interest across different maturities in both segments.
The OMO curve continued to offer higher yields than comparable NTB maturities, particularly at the shorter end, while yields moderated across the longer-dated OMO instruments.
At last week’s primary Treasury bills auction, the central bank offered N800 billion across the standard 91-day, 182-day, and 364-day maturities. Total subscriptions reached N1.91 trillion, or 2.38 times the offer.
Despite strong demand, total allotments stood at N71.16 billion, a sales-to-offer ratio of 0.09x. Stop rates declined by 1bp across all three maturities to settle at 15.40%, 15.79% and 15.80%, respectively.
The strong subscription level, combined with the significantly lower allotment, underscores deep investor demand for government securities and the central bank’s conservative bid acceptance, Cowry Asset Management Limited said in its update.
The investment firm said the marginal decline in stop rates also suggests that investors were willing to commit funds at slightly lower yields, supported by the prevailing liquidity surplus and attractive risk-adjusted returns on government instruments.
