Nigerian Treasury yields dip as demand for Naira Asset booms

Investors continue to increased bet on Nigeria’s Treasury bills with inflation-protected yields on the naira assets, trading details obtained from the secondary market confirmed.

Due to sustained bargain hunting, the average yields on the local treasury bills declined by 8 basis points to 17.55%, staying ahead of the annual inflation rate. 

With mixed expectations about the consumer price index (CPI), the market anticipates sustained spot rates repricing amidst hefty financial system liquidity and anticipated interest rates cut at the policy committee meeting later in February.

Stylishly, spot rates on investment securities are adjusting to macroeconomic outlook, inflation, and monetary policy rate expectations. Investors have been locking in yields on portfolio holdings, boosting demand for the naira assets.

The past Treasury bills auction confirms sustained demand for Nigeria’s bills with elevated yields. Banks, pension funds, and other foreign interests remain active – all auctions in 2026 were oversubscribed.

The Nigerian Treasury bills secondary market traded on a calm, mildly bullish note on Monday, supported by improved system liquidity, which drove selective demand, particularly across the near-to-mid tenors.

Notable yield declines were recorded on the 09-Apr-26 bill, which fell by 20bps from 16.50% to settle at 16.30%, while the 06-Aug-26 eased by 4bps to 16.09%.

In contrast, the 04-Feb-27 bill saw a sharp 20bps rise to 16.03%, reflecting risk-on demand within the near-to-mid segment of the curve alongside cautious sentiment at the long end.

Demand was noted at the short (-21bps) end of the curve, particularly on the 26-MAR (-88bps), 23-APR (-38bps), 09-APR (-24bps), and 21-MAY (-22bps) papers, which collectively dragged the average yield lower by 8bps to 17.55%.
Overall, yields at the belly of the curve closed within the range of 16.00% and 16.40%. Analysts expect demand and supply dynamics to drive yield movements in the interim.