Treasury Bills Yield Falls to 18.48% Ahead of Rate Decision
The average yield on Nigerian Treasury bills fell to 18.48% in the secondary market due to sustained bargain hunting on naira assets ahead of the monetary policy decision on interest rate.
With disinflation, real return on naira investments have become relatively strong versus emerging markets in the short term, supported by a high interest rate environment.The attraction of the fixed interest securities instrument caused associated yields to reduce across the short, belly and long end of the curve.
Last week, the Treasury bills market traded mixed starting quietly with modest interest in the Sep bill around 17.30% and steady demand for Jan–Apr OMO papers.
Early trading activity reflected investors’ cautious mode ahead of the Nigerian Treasury bills auction on Wednesday, with the 3-Sep bill settling near 16.90%.
The Treasury bills market traded more actively, with investors largely focusing on the September bills. Average yields, however, declined 11bps to settle at 18.48%.
The bargain hunting was supported by ample system liquidity, demand spill over from unmet bids at the PMA, and the softer August 2025 consumer price index print, which strengthened expectations of a dovish tilt by the monetary policy committee.
The auction drew strong interest, with total subscriptions of ₦1.59 trillion against a ₦290 billion offer, though only ₦345.10 billion was allotted to investors.
The discount rate on treasury bills paper sold to investors were reduced ahead of monetary policy easing expectations.
The CBN auction result showed that the stop rates cleared lower at 15.00% for 91-day from 15.32%, 15.30% for 182-day from 15.50%, and 16.78% for 364-day maturities from 17.69% at the previous auction.
Thereafter, significant buying momentum resurfaced, particularly for Nigerian Treasury bills that will expire in September 17 2026 quoted at 16.15/15.60%, while OMO interest stayed focused on the 7-Apr and 17-Feb papers.
Analysts at AIICO Capital Limited stated that trading in the Treasury Bills market is likely to remain cautious as investors await po;icy commitee meeting and assess current liquidity conditions.
Fixed income market analysts expect the outcome of the monetary policy committee meeting scheduled for September 22 and 23 to be the dominant driver of sentiment in the T-bills secondary market.
“While robust system liquidity should continue to buoy demand, the Committee’s decision and tone on monetary easing will be critical in determining the extent of further yield compression,” Cordros Capital Limited stated in a note. Excess Liquidity Worth over N2tn Keeps Market Rates in Check
