Treasury Bill Yields Drop Ahead of CBN's N700bn Auction

On Monday, Nigerian treasury bill yields decreased as investors showed heightened demand for short-term government securities in anticipation of the Central Bank of Nigeria's (CBN) N700bn primary market auction and upcoming inflation data. The average treasury bill yield fell by three basis points to 18.09%, indicating a bullish trend in the fixed-income market.

Notably, yields for the 4 February 2027 and 18 February 2027 maturities declined by 24 and 19 basis points, respectively. The CBN's benchmark interest rate stands at 26.50%, while headline inflation has eased to 15.91%, enhancing the real returns on government securities.

Analysts expect strong demand at the auction, with bids anticipated to exceed the offered amount. However, opinions are divided on the auction's stop rates, with some expecting a repricing of the 364-day treasury bill.

Emerging markets analyst Ike Ibeabuchi stated that the easing inflation has made current real returns more appealing, suggesting sustained demand for treasury bills.