Treasury Bills Yield Decrease by 5bps Ahead of Auction
Local investors increased their bets on Nigerian Treasury bills in the secondary market ahead of the Central Bank of Nigeria’s primary market auction scheduled to hold on Wednesday.
Due to bullish trading activities, the average yield declined by 5 basis points, with fixed income market investors expecting a higher spot rate to compensate for Nigeria’s accelerating headline inflation rate.
However, only a few trades were consummated despite improved liquidity conditions, according to TrustBanc Limited. Investors seek to reduce the negative impacts of inflation surge to 33.88%.
“The only way the market can compensate investors for piling up funds in government borrowing instruments is higher spot rates – but then, there is debate whether the Nigerian government should pay a premium on risk-free investment’, analysts said at MarketForces Africa forum.
Surprisingly, the Debt Office increased marginal rates on FGN bonds reopened on Monday. This raised market’s sentiment that spot rates could be adjusted further at the Treasury bills auction on Wednesday.
In a note, Cordros Capital Limited told investors that across the curve, the average yield declined at the short (-4bps), mid (-5bps), and long (-5bps) segments. The yield contraction was driven by demand for the 80-day to maturity (-5bps), 171-day to maturity (-5bps) and 290-day to maturity (-6bps) bills, respectively.
Traders at AIICO Capital Limited saw sell interest in the far-mid and long-dated securities, particularly the 06 Nov 2025 Treasury bills
.Most of the buying interests were concentrated at the mid to long ends of the curve. Notably, the 4-Sep (-6bps) and 9-Oct (-5bps) papers recorded the sharpest declines in yield. Overall, the average benchmark yield declined by 5bps to close at 24.30%.
Similarly, the average yield declined by 3bps to 26.4% in the OMO segment. #Treasury Bills Yield Decrease by 5bps Ahead of Auction Naira Plummets to N1690/$ after CBN Priced Spot Rate High
