WED MAY 27 2026-theGBJournal| Investor demand for Nigerian government securities remained concentrated in the Treasury bill market on Tuesday, driving yields lower across maturities, while the bond market extended its recent weakness as investors reduced exposure to longer-dated debt.
The divergent trading pattern underscores growing preference for shorter-duration instruments amid uncertainty over the interest-rate outlook, with Treasury bill yields edging lower even as selling pressure pushed benchmark bond yields higher.
The money market remained largely stable, with the overnight lending rate holding steady at 22.2%, indicating adequate liquidity within the banking system and the absence of significant funding pressures among lenders.
In the Treasury bills secondary market, bullish sentiment persisted as investors continued to accumulate short-term government securities. Average yields declined by 1 basis point to 17.5%, extending the recent downward trend and reflecting sustained demand for risk-free instruments offering attractive real returns.
The rally was broad-based across the curve. At the short end, yields fell by 1 basis point, driven by buying interest in the 86-day-to-maturity bill.
The mid-segment also recorded a 1-basis-point decline following demand for the 163-day instrument, while yields at the long end contracted by 1 basis point as investors accumulated the 345-day bill.
The synchronized decline across all tenors suggests investors remain comfortable locking in current rates despite expectations that yields could remain elevated in the near term.
The bullish momentum was even more pronounced in the Central Bank’s Open Market Operations (OMO) segment, where average yields declined by 2 basis points to 21.1%.
The stronger demand for OMO securities highlights investors’ continued appetite for higher-yielding short-term instruments, particularly among institutional investors seeking to optimize returns while minimizing duration risk.
By contrast, sentiment in the Federal Government bond market turned negative. Average yields on benchmark bonds rose by 2 basis points to 15.8%, reflecting a pullback in prices as investors trimmed holdings of longer-dated securities.
The selloff was concentrated in the mid- and long-tenor segments of the curve. Yields on mid-term bonds increased by 2 basis points, largely due to selling pressure on the June 2033 bond, whose yield climbed 10 basis points.
At the long end, yields rose by 5 basis points, driven by a sharp repricing of the June 2038 bond, which recorded a 38-basis-point increase in yield, making it the weakest-performing benchmark security during the session.
The short end of the bond curve offered the only respite, with yields declining by 4 basis points as investors sought exposure to the February 2031 bond, pushing its yield down by 13 basis points.
The contrasting performance between Treasury bills and bonds reflects a market increasingly reluctant to take long-duration risk.
While investors continue to deploy liquidity into short-dated government securities, concerns about inflation, future monetary policy decisions and the trajectory of domestic borrowing costs appear to be limiting appetite for longer-term bonds.
The result is a gradual steepening of the sovereign yield curve, with short-term rates drifting lower even as long-term borrowing costs remain under upward pressure.
X-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com|govandbusinessj@gmail.com
