Nigeria’s Treasury bill yields declined at Wednesday’s primary market auction as elevated liquidity in the financial system continued to support demand for short-term government securities.
The benchmark 364-day Treasury bill closed at 16.149 percent, slightly lower than 16.15 percent at the previous auction, extending the gradual moderation in yields that has persisted since March.
Auction results released by the Central Bank of Nigeria (CBN) showed demand remained heavily skewed toward the one-year instrument, which attracted subscriptions of about N1.84 trillion against an offer of N500 billion. Total allotment on the tenor stood at N683.29 billion.
“The 364-day bill continued to attract the bulk of investor demand as market participants sought to lock in relatively attractive risk-free yields at the long end of the curve,” Ayodeji Ebo, managing director of PlutusNeo by Afrinvest, said.
The 182-day bill recorded subscriptions of N81.04 billion against the N50 billion offered, with stop rates unchanged at 16.14 percent. The 91-day bill attracted N68.63 billion against an offer of N100 billion, with its stop rate at 15.95 percent.
The latest auction extends a broader downward trend in Treasury bill yields, which has persisted since March after a volatile repricing cycle in February. The 364-day stop rate has eased from 16.73 percent on March 4 to 16.149 percent at the latest auction.
Ahead of the auction, Meristem Securities projected lower stop rates across tenors, citing reinvestment demand and liquidity conditions within the banking system.
“Liquidity conditions remain robust, with maturing bills worth N634.47 billion almost offsetting the N650 billion offer size,” the firm said.
Mersitem also said unmet demand from the Federal Government bond auction was expected to flow into the Treasury bills market, supporting demand and lower stop rates.
At the bond auction earlier in the week, the Debt Management Office (DMO) recorded total subscriptions of N796.17 billion for the N600 billion offered across two reopened instruments, the 22.60 percent FGN JAN 2035 bond and the 16.2499 percent FGN APR 2037 bond. Marginal rates settled at 17 percent and 17.04 percent.
Inflation rose to 15.69 percent in April from 15.38 percent in March, keeping pressure on real returns in the fixed-income market.
Analysts say investors continue to favour Treasury bills due to their safety, liquidity, and relative returns, while liquidity conditions remain the main driver of near-term pricing.
The continued moderation in yields has also reduced the government’s short-term borrowing costs, though sustained inflationary pressure could challenge the trend if liquidity conditions tighten.