T-bill yields edged lower on Monday as investors stepped up demand for short-term government securities ahead of the Central Bank of Nigeria’s (CBN) planned N700bn treasury bill auction. The renewed buying interest also comes as the market awaits fresh inflation data, with investors increasingly positioning themselves for what could be another strong showing for fixed-income assets.
The stronger demand pushed yields down across several parts of the treasury bill curve, extending the positive momentum that has recently dominated Nigeria’s fixed-income market. The average treasury bill yield fell by three basis points to 18.09 per cent, while demand was particularly strong around the February 2027 maturities. Yields on the February 4 and February 18, 2027 bills dropped by 24 and 19 basis points respectively, showing that investors are actively chasing available returns.
The move is also being supported by Nigeria’s changing inflation picture. Headline inflation has eased to 15.91 per cent, while the CBN’s benchmark interest rate remains high at 26.50 per cent. As inflation cools, the real return investors can earn from government securities becomes more attractive, giving treasury bills a stronger position among naira-denominated investment options.
Attention is now shifting to Wednesday’s N700bn CBN auction, where market participants expect demand to remain strong and bids could exceed the amount being offered. However, investors remain divided over where the auction’s stop rates will settle. While some expect a repricing of the 364-day treasury bill following recent rate adjustments, others believe the CBN could keep rates relatively stable, encouraging investors to lock in current yields before conditions change.
For investors, the latest movement highlights a delicate balance between attractive yields and expectations of further inflation easing. With the average benchmark treasury bill yield already falling from 18.23 per cent a week earlier to 18.12 per cent last Friday, the downward trend could continue if demand stays firm. Market participants will therefore be watching the N700bn auction closely, as its outcome could provide a clearer signal of where Nigerian fixed-income yields are headed next.
source: punch
