SAT JAN 10 2026-theGBJournal| The Treasury bills market was bearish this week as investors unwound positions to participate at the NTB PMA. Consequently, the average yield across all instruments increased by 27bps to 19.9%.
Across segments, average NTB yields increased by 30bps to 17.8%, while average OMO yields declined by 16bps to 21.7%. At Wednesday’s NTB PMA, the DMO offered N1.15 trillion in bills, with total bids reaching N1.54 trillion (bid-to-offer: 1.3x).
Eventually, the Debt Management Office (DMO) allotted N1.14 trillion at the auction (bid to cover: 1.3x), with stop rates rising across all tenors.
The 91-D bill cleared at 15.80% (previous: 15.50%), the 182-D at 16.50% (previous: 15.95%), and the 364-D at 18.47% (previous: 17.51%).
Notably, the DMO released the Q1-26 issuance calendar with N7.55 trillion (Q1-25: N4.32 trillion | 2025FY: N14.46 trillion) expected to be raised in the first quarter.
Also, the CBN conducted an OMO auction, offering N600.00 billion worth of bills across the 161-D and 210-D tenors. Ultimately, N2.70 trillion was allotted at respective stop rates of 19.34% and 19.40%.
Ordinarily, with system liquidity expected to improve next week, this should drive demand for T-bills and cause yields to taper.
However, we cite that the recent surge in supply at primary market auctions could affect the level of demand in the secondary market, causing a measured uptick in treasury yields.
Bearish sentiments persisted in the FGN bond secondary market as local investors continued to position ahead of the recent trend of increased supply.
Consequently, the average yield increased by 21bps at 16.8%. Across the curve, the average yield increased at the short (+25bps), mid (+23bps), and long (+5bps) segments driven by sell pressures on the AUG-2030 (+97bps), JUN-2033 (+42bps), and JAN-2042 (+24bps) bonds, respectively.
Next week, market does not rule out continued selloffs of bond instruments as investors seek to participate in upcoming treasury auctions where the DMO will likely maintain the elevated stop rates.
Meanwhile, the OVN rate expanded by 4bps to 22.8% as OMO auction debits (N2.70 trillion) outweighed inflows of N1.37 trillion from OMO maturities.
As a result, average system liquidity tapered, closing at a net long position of NGN2.44 trillion (prior week: N3.77 trillion).
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