Nigerian Treasury Bills Yield Rises on Pre-Inflation Portfolio Reshuffles
The average yield on Nigerian government treasury bills increased as fixed-income market investors rebalanced their portfolios ahead of the inflation rate announcement.
The secondary market for Treasury papers closed on a mixed note with a bearish bias as investors balanced attractive yields against fresh primary market supply last week.
Inflation rate expectations served as a guide for fixed-income market participants ahead of Monday’s consumer price index (CPI) data release.
Analysts anticipate headline inflation will moderate further, driven by macro shifts, including a stable exchange rate. The newly issued 1-year bill was actively traded after the spot rate was increased to 17.59% at the primary market auction on Wednesday.
Traders reported that yields surged across the short (+8 bps), mid (+55 bps), and long (+45 bps) segments of the curve on Friday. Overall, the average benchmark yield increased by 30bps week-on-week to 18.53%.
The Central Bank of Nigeria (CBN) auctioned Treasury bills midweek, offering N700 billion across standard tenors. Total subscriptions reached N4.414 trillion, implying an overall subscription-to-offer ratio of approximately 6.3x.
Total allotments reached N1.46 trillion, more than twice the amount initially offered, driven predominantly by the 364-day tenor, which received N1.26 trillion in allotments against N4.19 trillion in subscriptions.
The stop rate on the 364-day bill consequently increased by 24 bps to 17.59%, while the rates on the 91-day and 182-day bills remained unchanged at 16.30% and 16.50%, respectively.
The strong demand, alongside the higher long-tenor stop rate, suggests that investors continue to favour longer-dated instruments but are demanding additional compensation for duration and reinvestment risks.
In the OMO bills segment, trading activities improved with strong participation following the CBN’s revised participation framework. #Nigerian Treasury Bills Yield Rises on Pre-Inflation Portfolio Reshuffles CBN to Auction Nigerian Treasury Bills, Targets N700 Billion
