Nigerian Treasury Bills Yield Declines to 17.6%

Trading in Nigerian Treasury bills was active last week, with demand concentrated in the mid-section of the yield curve in the secondary market. The rally reflected strong liquidity flows and heightened investor appetite for naira-denominated assets.

Average yields fell by 65 basis points week-on-week, closing at 17.62 per cent, according to Cowry Asset Management Limited. The decline was largely driven by bank balance sheet flows rather than structural asset reallocation, underscoring the liquidity-driven nature of the move.

Market activity began on a quiet note, with muted trading across maturities keeping yields flat. By midweek, attention shifted to the treasury bill auction, which triggered a broad bullish response. Demand strengthened across short-, mid-, and long-tenor bills, compressing yields further. The newly issued long-dated bill maturing on 04 February 2026 settled around 15.80 per cent, reflecting sustained interest in longer-dated instruments.

At the auction, the Central Bank of Nigeria (CBN) offered ₦1.15 trillion across the 91-day, 182-day, and 364-day tenors, exceeding the ₦668.86 billion of maturing bills. Total subscriptions surged to ₦4.59 trillion, with nearly 96 per cent of bids directed toward the 364-day instrument. The CBN allotted ₦952.6 billion, below the offer size, producing a bid-to-cover ratio of 4.81 times and a sales-to-offer ratio of 0.83 times.

Stop rates on the 91-day and 182-day bills were unchanged at 15.84 per cent and 15.65 per cent, while the 364-day stop rate dropped sharply by 137 basis points to 16.99 per cent. Analysts said the outcome highlighted strong liquidity-driven demand and the CBN’s continued rate discipline through partial allotments.

Cowry Asset noted that yields, particularly in the six- to twelve-month segment, could remain under downward pressure in the near term. However, the firm cautioned that the current yield compression is cyclical and liquidity-induced rather than a signal of policy easing. A reversal, it added, would likely require sizable Open Market Operation (OMO) issuance, FX-related sterilisation, or other liquidity absorption measures.