Nigerian Treasury, OMO Bills Rally as Supply Tightens
This week, trading commenced positively in the secondary market for Treasury Bills and the OMO bills segment, with focus turning to the shorter and middle sections of the yield curve.
Investors have been ramping up naira assets to lock in yields amidst expectations that the monetary authority will start slashing the interest rate benchmark as macro indicators begin to improve. The inflation rate has declined for two consecutive months, thus widening the real return on investments while the policy rate remains constant.
Fixed income market analysts said in their separate reports that the average yields declined by four (4) basis points (bps) to settle at 19.2%. The week started strong as investors turned to the secondary market, driving prices higher.
With no Nigerian Treasury bills auction scheduled, demand concentrated on the 9 October bill. Overall, the average mid-rate across the benchmark treasury papers fell as demand heated up in the secondary market on fear of interest rate cuts.
The upward trend is likely to continue, backed by decent market liquidity, even as investors await the third quarter of 2025 auction calendar.
In its market update, analysts at Cordros Capital Limited said across the curve, the average yield contracted at the short (-2 bps), mid (-5 bps), and long (-5 bps) segments.
The yield contraction in the secondary market was driven by the demand for the 80-day to maturity (-3 bps), 94-day to maturity (-137 bps), and 318-day to maturity (-55 bps) bills, respectively.
Similarly, the average yield contracted by 1 bp to 25.7% in the OMO segment. Analysts said they expect the Central Bank will likely conduct open market operations as more OMO bills are set to expire. #Nigerian Treasury, OMO Bills Rally as Supply Tightens FGN Bond Yield Falls to 18.4% as Thin Supply Stokes Rally
