Nigerian treasury bill yields edged lower on Monday as investors increased demand for short-term government securities ahead of the Central Bank of Nigeria’s N700bn primary market auction and the release of fresh inflation data.
The buying interest pushed yields lower across different segments of the treasury bill curve, reflecting stronger demand for fixed-income assets amid expectations that inflation will continue to moderate.
The average treasury bill yield fell by three basis points to 18.09 per cent on Monday, extending the bullish sentiment that has characterised the fixed-income market in recent sessions.
At the mid-section of the curve, demand was particularly strong for 4 February 2027 and 18 February 2027 maturities, whose yields declined by 24 basis points and 19 basis points respectively.
The 8 July 2027 treasury bill was quoted at 17.00 per cent/16.90 per cent, while the 29 July 2027 paper traded at 17.15 per cent/17.00 per cent.
The movement comes against the backdrop of a relatively high interest-rate environment, with the CBN’s benchmark interest rate at 26.50 per cent, while headline inflation has eased to 15.91 per cent.
The decline in inflation has improved the real return available to investors in government securities, strengthening the appeal of treasury bills as investors reassess the returns available across naira-denominated assets.
Market participants expect demand for treasury bills to remain firm as investors position ahead of Wednesday’s auction. The CBN is scheduled to offer N700bn across the standard treasury bill tenors, with analysts expecting the auction to attract bids above the amount on offer.
However, expectations regarding the auction’s stop rates remain divided.
While some market participants anticipate a repricing of the 364-day treasury bill following the CBN’s recent adjustment of rates, others expect the apex bank to maintain relatively stable rates at the auction.
The latest market trend suggests that investors are willing to lock in current yields before any potential changes in auction pricing or further moderation in inflation.
The average benchmark treasury bill yield had already declined to 18.12 per cent last Friday, from 18.23 per cent a week earlier, indicating a gradual easing in market yields.
Analysts expect liquidity conditions and investor demand for relatively high-yielding government securities to remain key drivers of the market in the near term, particularly as investors balance the opportunity to lock in current returns against expectations of further disinflation.
“Investors are showing stronger interest in treasury bills as yields remain attractive relative to inflation. With inflation easing, the current real return is becoming more appealing, so demand could remain strong at the auction,” an emerging markets analyst, Ike Ibeabuchi, noted.