The Central Bank of Nigeria (CBN) has raised its total offer at the latest Treasury Bills Primary Market Auction to N550 billion, an increase from the N400 billion offered in the previous auction. The offer was split across the 91-day, 182-day, and 364-day tenors.
Despite the increased offer, investor demand showed signs of softening as total subscriptions dropped by 29.45 per cent to N1.01 trillion. However, total allotments surpassed the offer, rising to N598.33 billion, which represents an 8.79 per cent increase compared to the previous week’s auction.
According to analysts at Meristem Securities, stop rates for the 91-day and 182-day instruments remained unchanged at 18.00 per cent and 18.50 per cent respectively, while the 364-day instrument saw a slight increase in its stop rate, settling at 19.63 per cent.
Investor interest was largely focused on the 364-day tenor, which accounted for a substantial N956.88 billion in bids, representing 87.99 per cent of the total subscription. This shows that most investors are still leaning towards longer-term instruments to maximise returns in the high-yield environment.
In the secondary market, average yield on Treasury bills declined by 10 basis points week-on-week, falling to 20.97 per cent from 21.07 per cent. The decline is attributed to investors who missed out on the primary auction shifting their focus to the secondary market for placements.
On a tenor-by-tenor basis, short-term maturities recorded a marginal decline of 4 basis points, while mid- and long-term bills showed mixed performance. Specifically, yields on the 6-month, 9-month, and 12-month tenors dropped by 3, 48, and 7 basis points respectively, signalling cautious investor positioning and growing activity around the 9-month bills.
In a related move, the CBN also held an Open Market Operations (OMO) auction during the week, offering N500 billion across the 315-day and 329-day tenors. The auction attracted strong interest, recording total bids of N773.74 billion. The apex bank eventually sold N756.74 billion worth of OMO bills, with stop rates settling at 22.65 per cent and 22.72 per cent for the two tenors, indicating a much tighter liquidity environment and higher short-term borrowing costs.
In the local bond market, activity started the week on a slightly positive note. Yields on select benchmark bonds such as APR-33s, JUN-35s, and JUL-37s declined by 3 basis points, pushing average bond yields marginally lower to 19.04 per cent from 19.07 per cent in the previous week.
Meanwhile, the Eurobond market turned bullish during the week as investor appetite increased across nearly all maturities, with the exception of the NOV-27 paper which saw a minor yield rise of 3 basis points. Other Eurobonds recorded significant yield declines—NOV-25 dropped by 43 basis points, MAR-29 by 30 basis points, and JUN-31 by 27 basis points. Overall, the average Eurobond yield declined by 18 basis points to 10.12 per cent from 10.30 per cent.
Analysts at Meristem attributed the market movements to investors’ strategic repositioning in response to the changing yield landscape and broader macroeconomic conditions, including inflation, liquidity trends, and monetary policy direction.
