Bearish Tide Hits T-Bills Market As Mid, Long-Term Yields Surge

Activities in the secondary Treasury bills market turned bearish last week as yields advanced by 10 basis points to close at 17.9 per cent.

The upward movement in yields was largely driven by selloffs across the mid and long segments of the curve, where yields expanded by 48 basis points and four basis points, respectively, to 18.2 per cent and 19.6 per cent. In contrast, yields on short-dated bills declined by 23 basis points to 16.0 per cent.

Analysts at Cordros Capital noted that tight liquidity conditions largely drove bearish sentiment in the banking system’s secondary market. “For the week ahead, we expect a mild bearish tilt in the secondary Treasury bills market, driven by continued tight liquidity conditions,” the analysts said in an emailed note.

However, the analysts projected that liquidity in the banking system could improve in the coming days, supported by expected inflows from maturing instruments.

According to them, inflows of about N1.06 trillion from OMO maturities, N398.65 billion from Federal Government bond coupon payments, and N700 billion from the March 2026 bond redemption are expected to boost system liquidity.

They added that the expected inflows could put downward pressure on short-term rates. “This substantial liquidity injection should exert downward pressure on the overnight rate, although a potential OMO auction and net Treasury bills allotment could partly temper the pace of the decline,” the analysts stated.