Nigerian Treasury Bills Returns Head South Ahead of Inflation
The average yield on Nigerian Treasury bills (NTB) declined further across standard tenors in the secondary market ahead of inflation data scheduled for release this week. The headline inflation rate is projected to ease after the consumer price index was rebased in the second quarter, while the market anticipates potential rate cuts to begin in the second half of 2025.
As the authority tightens its fists on Treasury bills and local bond supply, demand is expected to filter into the secondary market, and yields are projected to plunge until it fuels capital outflow risks significantly.
The recent release of the Q3 bond issuance calendar, signaling a substantial cut in proposed borrowings, sustained investor appetite in the secondary market, setting the tone for the Treasury bills auction that was held on Wednesday.
One year stop rate at the auction declined by 254 bps to 16.30% amid strong demand. At the beginning of the trading session last week, investors sought yields in the secondary space, especially on the 9 October bill.
This momentum carried through midweek, with robust demand across mid-to-long-dated papers. Yields have been coming down as asset managers, banks and other market players continue to ramp up the naira assets due to declining supply – a shift from the old pattern.
Hence, the Nigerian Interbank Treasury True Yield curve experienced broad-based declines amid strong secondary market demand for Treasury bills, where average yields dipped by 156 basis points to 18.35%, according to Cowry Asset Management Limited.
The Central Bank of Nigeria (CBN) conducted a Treasury Bills auction, offering N250 billion across standard maturities. Demand remained robust, with total subscriptions reaching N1.33 trillion, although the apex bank allotted just N201.82 billion.
Investor interest was heavily tilted toward the 364-day bill, which alone drew N1.18 trillion in subscriptions, with N126.31 billion allotted. The bid-to-cover ratio for this tenor stood at 6.59x—still high, though slightly lower than the 7.61x recorded at the previous auction.
Yields fell notably across all tenors. The 91-day bill cleared at 15.74%, down from 17.80% at the last auction. The 182-day and 364-day bills settled at 16.20% and 16.30%, respectively, marking a continued decline from previous levels of 18.35% and 18.84%.
Analysts told MarketForces Africa that they expect mixed-to-bullish market activity in the near term, tracking available liquidity levels. #Nigerian Treasury Bills Returns Head South Ahead of Inflation MTN Nigeria Hits All-Time High, Analysts See 44% Upside Potential
