Treasury Bills Yields Fall on Investor Demand for Naira Assets
Nigerian Treasury bill yields declined across the short, belly, and long durations as the fixed income market continues to accumulate positions in naira assets.
Trading activity was positively influenced by the latest decline in headline inflation and the Central Bank of Nigeria (CBN) Monetary Policy Committee’s decision to keep the policy rate at 26.5%.
Both equities and fixed income markets attracted significant buying interest, confusing observers about the real economic health of Africa’s most populous nation.
In the absence of a primary market auction, yield-seeking fixed income market investors ramped up their exposure to naira assets, with demand for long-duration Treasury bills topping their preference.
The market recorded investor demand for Nigerian Treasury bills maturing on 15 Jul 2027, driving most of the activity in the secondary market on Thursday.
The tenor commenced trading with quotes at 17.40%/17.30% before gaining traction to close at 17.30%/17.25%, according to investment firm Herwood Capital Limited.
The investment firm said additional interest was observed in the 5 Nov 2026, 4 Feb 2027, and 4 Mar 2027 NTBs, quoted at 16.50%/16.40%, 17.35%/17.00%, and 16.80% offer, respectively.
Traders reported yield contractions in the mid (-3 bps) and long (-7 bps) segments of the curve due to investors’ buying interest. Hence, the average yield declined by 4bps to 18.30%.
In the OMO segment, the October–December bills attracted the most interest, with the 20 Oct 2026, 17 Nov 2026, and 8 Dec 2026 OMO bills quoted at 20.60%/19.70%, 21.10% bid, and 19.40% bid, respectively.
Investment firm Herwood Capital expects similar sentiment to persist, supported by prevailing liquidity conditions and sustained investor interest in high-yielding papers. MPC: Firms Predict Interest Rate Hold as Macro Stability Takes Priority
