Nigerian treasury bill yields ease as investors eye N700bn CBN auction

This occurred ahead of the Central Bank of Nigeria's N700bn primary market auction and the release of new inflation data. The average treasury bill yield fell by three basis points to 18.09 percent, extending a bullish trend in the fixed-income market. Strong demand was noted for specific maturities, with yields declining by 24 and 19 basis points for the February 4, 2027 and February 18, 2027 maturities, respectively.

This movement is set against a high interest-rate environment, with the CBN's benchmark rate at 26.50 percent and headline inflation at 15.91 percent. The moderation in inflation has made government securities more attractive, improving real returns for investors. Market participants anticipate continued strong demand for treasury bills leading up to Wednesday's auction, where the CBN plans to offer N700bn.

Analysts are divided on whether the auction's stop rates will be repriced or remain stable. The average benchmark treasury bill yield had already dropped to 18.12 percent last Friday from 18.23 percent a week prior. An emerging markets analyst, Ike Ibeabuchi, noted that investors are showing stronger interest in treasury bills due to attractive yields relative to easing inflation, suggesting demand could remain robust at the auction.