Nigerian Treasury Bills Yields Fall after CBN Rejects Auction Bids
The average yield on Nigerian Treasury bills (NTBs) moderated to 17.88% on sustained secondary market demand for the naira asset on Monday. Traders reported yield contraction in the short (-2bps) and mid (-3bps) segments following lower supply at last week’s primary market auction.
At the primary Treasury bills auction, the Debt Management Office (DMO) offered N800 billion across the standard 91-day, 182-day and 364-day maturities, attracting total subscriptions of N1.91trn, equivalent to 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 strong investor demand for government securities and the DMO’s conservative bid acceptance.
An 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.
Opening the week with a healthy appetite for the naira asset, traders said buying interest also emerged in the OMO bill segment, where retail and corporate investors hold sway.
Providing market insight, Herwood Securities Limited told investors in an update that the Nigerian Treasury bill expiring on 8 July 2027 was quoted at 16.80% offer, while the 15 July was offered at 16.70%.
The investment firm revealed that the 26 August Treasury bills were quoted at 16.55%/16.40% bid/offer, the 2 September papers at 16.10% offer, and the 7 October NTB at 15.55% offer.
In the OMO segment, the 26 January OMO was offered at 17.25%, while the 2 February OMO was quoted at 17.50% offer. Further along the curve, analysts said the 20 April OMO was quoted at 17.05%/17.00% bid/offer, while the 22 June OMO was offered at 16.20%.
Overall, trading activity remained relatively active across both segments, with market interest spanning different maturities.
The OMO curve continued to offer higher yields than comparable NTB maturities, particularly at the shorter end, while yields moderated further along the longer-dated OMO curve.
Higher yields on shorter-dated OMOs may continue to support demand in that segment, while investors are also expected to cherry-pick NTBs at prevailing levels.
Herwood Securities Limited told investors that market activity will likely remain driven by yield considerations and demand across the maturity spectrum. Nigeria’s 20-Year US Dollar Bond Yield Falls to 8.50%
