Yields on Nigerian Treasury bills are expected to decline in Wednesday’s primary auction as improved liquidity conditions ease pressure on short-term borrowing costs.
Market analysts point to recent inflows from maturing securities and FAAC allocations as drivers of liquidity.
“FAAC allocation came in yesterday, creating liquidity in the market, Also, the CBN has a higher maturity of N1.18 trillion to be paid on Thursday compared to the amount offered,” Gbolahan Ologunro , a portfolio manager at FBNQuest said.
“The demand pressure on the FX market witnessed in the past week has also cooled down a bit, so there’s no incentive for the CBN to increase yield to attract foreign investors,” Ologunro said.
At recent auctions, appetite for Nigeria’s one-year Treasury bills has been on a steady decline, despite the Central Bank of Nigeria’s (CBN) efforts to raise yields in the past two auctions.
The CBN revised its auction calendar to include an additional sale last Wednesday. At this surprise auction, yields on one-year Treasury bills climbed to 24.90% from 22.52%—marking the second consecutive increase—as liquidity constraints continued to weigh on the market.
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Today, the Central Bank of Nigeria is offering N700 billion across the 91-day, 181-day, and 365-day tenors. However there is also a N1.18 trillion maturity expected on Thursday.
“ The N700 billion that will be offered across standard tenors is significantly lower than the N1.18 trillion in maturities. This supply-demand imbalance could influence market sentiment and drive further yield movements downward,” Joseph Joshua, fixed-income analyst at CSL Stockbroker, said.
On the contrary, analysts at Meristem project that rates are to increase marginally in the upcoming auction, following the previous trend.
“This can be attributed to persistently low system liquidity, which stood at N267.44 billion as of March 25, 2025, and the government’s budget deficit, of which only about 23 percent has been raised so far.”
“The 91-day rate is likely to remain at the current level, while we expect a further uptick in the 182-day and 364-day tenors. Additionally, the government’s aim to make the yields attractive to sustain foreign inflows and boost FX reserves necessitates the need for higher yields,” Meristem analysts said.
