Yield on Nigerian Treasury Bills Dips Ahead of Auction, Inflation
In an attempt to lock in yields, Nigerian Treasury Bills rallied across the short, belly, and long durations ahead of the main auction scheduled for Wednesday.
Nigeria’s treasury bills yield continues to provide inflation-protected returns on naira asset investments in line with the country’s high interest rate environment.
With inflation dropping to 15.91% and a benchmark interest rate of 26.50%, real return on investment has expanded, and market analysts are also anticipating disinflation to persist.
This is expected to boost the naira value of Treasury bills investment, which has been absorbing excess liquidity in the financial system in addition to other short-term instruments.
On Monday, fixed income market analysts said sustained buying pressure across the curve pulled the average T-Bill yield down by 3 bps to settle at 18.09%, highlighting prevailing bullish sentiment in the market.
At the belly of the curve, traders reported investors’ demand for 04-Feb-27 (-24bps) and 18-Feb-27 (-19bps) Treasury bills. The Treasury papers with 8 Jul 2027 and 29 Jul 2027 maturities were seen trading at 17.00%/16.90% and 17.15%/17.00%, respectively.
Similar sentiment is expected to persist, supported by prevailing liquidity conditions and sustained investor interest in high-yielding papers ahead of the inflation data release later in the week.
On Wednesday, the Central Bank of Nigeria (CBN) will auction N700 billion worth of Treasury bills across the standard tenors. Analysts have predicted demand to eclipse the total offering.
Based on recent auction results, spot rate expectations differ, with markets anticipating upward repricing for 364-day bills, which the authority had reduced. Others think the Apex Bank will keep spot rates relatively unchanged at the midweek auction.
The average benchmark Treasury bill yield declined by 11 bps week on week to 18.12% on Friday, from 18.23% previously. In contrast, the OMO secondary market witnessed mild selloffs as investors posit NGX Market Cap Tops N160trn as Equities Investors Gain N1.91trn
