…Nigeria’s Q3 Treasury-bill programme is sizeable, with N5.8 trillion of gross issuance planned between July and September, against about N2.64 trillion of maturities.
THUR SEPT 10 2026-theGBJournal| Nigeria’s short-term debt market strengthened on Wednesday as investors poured N2.64 trillion into Treasury bills, allowing the government to raise more than originally planned while cutting the yield on one-year paper by 22 basis points.
The auction offered the clearest indication yet of the demand supporting Nigeria’s fixed-income market.
The Debt Management Office (DMO) offered N750 billion across 91-day, 182-day and 364-day Treasury bills, but received bids equivalent to 3.5 times that amount.
It ultimately allotted N1.05 trillion, or about 40 per cent more than the initial offer, with the stop rate on the 364-day bill falling to 16.62 per cent.
Rates on the 91-day and 182-day bills were unchanged at 16.30 per cent and 16.50 per cent, respectively.
The result marks a notable shift in the balance between supply and demand in the Treasury bill market. Investors were prepared to absorb additional government paper even as the return demanded on the longest tenor declined.
That demand was reflected in secondary-market trading. The average Treasury bill yield fell 1 basis point to 18.8 per cent, with yields declining across the curve.
The short and middle sections each fell 1bp, while the long end declined 2bps.
The most pronounced move was in the 358-day bill, whose yield fell 16bps, while the 92-day and 176-day bills each declined by 1bp.
The divergence between the auction and secondary-market yields is important.
While the primary-market 364-day stop rate settled at 16.62 per cent, the secondary market continued to price paper at higher levels, indicating that investors are still demanding a premium for holding existing securities but are increasingly willing to accept lower clearing yields for new government issuance.
Demand tests the lower-yield environment
Wednesday’s auction comes as investors reassess the return available across naira fixed-income assets.
The willingness of the DMO to allot N1.05 trillion against an N750 billion offer suggests that demand was sufficiently strong to accommodate additional supply without forcing the government to raise yields.
That is significant for a market in which the government remains a large borrower and the central bank is using Treasury bills as an important instrument for managing liquidity.
The strong subscription also confirms the continuing preference for government securities among institutional investors seeking relatively liquid naira assets.
The concentration of demand at the longer end of the Treasury bill curve has been a recurring feature of recent auctions.
For investors, however, falling stop rates create a trade-off. Those already holding higher-yielding bills stand to benefit from price appreciation as market yields fall. New investors, by contrast, must accept lower prospective returns or move further along the risk curve.
OMO yields follow
The repricing extended beyond Treasury bills.
The average yield in the OMO market fell 12bps to 20.4 per cent, reinforcing the broader downward movement in short-term government-backed instruments.
The overnight lending rate, meanwhile, rose by 10bps to 22.3 per cent, although there was no significant funding pressure in the banking system.
The combination suggests that Wednesday’s move was not driven simply by a shortage of cash in the money market.
Rather, investor demand for securities appears to have been strong enough to pull yields lower despite relatively firm overnight funding costs.
Bonds join the rally
The bullish tone extended into longer-dated government debt, with the average yield on FGN bonds falling 3bps to 16.3 per cent.
The move was broad-based. Average yields declined 8bps at the short end, 1bp in the middle and 1bp at the long end of the benchmark curve.
The strongest individual moves came in the April 2029 bond, where yields fell by 54bps, followed by the July 2045 bond, down 17bps, and the March 2036 bond, down 2bps.
The sharp fall in the April 2029 yield points to particularly strong demand for shorter-duration sovereign debt, where investors can capture price gains without taking the same degree of duration risk associated with longer-dated bonds.
A market increasingly priced for lower yields
Wednesday’s trading therefore produced a consistent signal across the fixed-income curve: investors are increasingly willing to lock in government debt at lower yields.
The key test will be whether the move survives subsequent auctions and heavier government supply.
Nigeria’s Q3 Treasury-bill programme is sizeable, with N5.8 trillion of gross issuance planned between July and September, against about N2.64 trillion of maturities.
The programme implies roughly N3.16 trillion of net new borrowing, with the 364-day tenor accounting for about 69 per cent of planned issuance.
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