The average yield on Nigerian Treasury bills has dipped to about 17.0 percent, reflecting mounting demand for naira‑denominated assets and growing expectations that the Central Bank of Nigeria (CBN) will ease monetary policy.
Investors are piling into Treasury bills despite large auction volumes, as banks seek yield‑generating assets and secondary‑market liquidity remains elevated.
In the most recent auction, the CBN offered ₦700 billion in Treasury bills, ₦100 billion for 91‑day, ₦150 billion for 182‑day and ₦450 billion for 364‑day tenors.
Despite that large offer, total subscriptions soared to ₦1.29 trillion, and the CBN sold ₦1.09 trillion at stop‑rates of 15.30 percent (91‑day), 15.50 percent (182‑day) and 16.04 percent (364‑day), all unchanged from prior levels.
Meanwhile, open‑market operations (OMO) auctions added pressure: one offering of ₦600 billion across 173‑ and 182‑day papers attracted ₦3.77 trillion in bids, with ₦2.98 trillion allotted. Yield on 173‑day was 20.54 percent and 182‑day at 20.55 percent.
Why yields are falling
Analysts attribute the drop in Treasury bill yields to two main forces: strong liquidity in the banking system and renewed confidence in the naira. The market is now anticipating a policy‑rate cut by the CBN, which is stoking demand for fixed‑income assets.
According to research from Cordros Capital Limited, the average yield across all instruments declined by 23 basis points week‑on‑week to 19.1 percent; T‑bill yields specifically dropped 3 bps to 17.0 percent, while OMO yields were down 26 bps to 21.5 percent.
October’s inflation print at 16.05 percent year‑on‑year (down from 18.02 percent in September) bolsters expectations that disinflation and currency stability will keep yields under pressure.
What it means ahead of the MPC
With the CBN’s Monetary Policy Committee (MPC) meeting scheduled for November 24‑25, fixed‑income players expect a further 100 basis‑point reduction in the Monetary Policy Rate (MPR) to 26.0 percent.
Liquidity is poised to stay positive, buoyed by an OMO maturity of ₦489.37 million and ₦15 billion in federal‑government bond coupon inflows, according to analysts at Cowry Asset Limited.
However, the treasury‑bill market could start with a mildly bearish tone as participants adjust to the recent yield drops and await fresh primary‑market supply. With month‑end approaching, portfolio managers may gravitate toward mid‑segment maturities (March and April) as they rebalance for cash‑flow needs.
Bottom line
The slide in T‑bill yields to 17 percent signals growing investor sentiments in Nigeria’s fixed‑income market, underpinned by strong demand, excess liquidity and rate‑cut expectations.
As the MPC meeting looms, the yield outlook remains tilted downward, but investors will watch primary supply, currency movements and inflation data for cues of whether the rally can sustain.