Nigeria’s one-year T-bills auction saw yields drop to 29.51 per cent, continuing a downward trend as the DMO manages borrowing costs.
But then, despite a smaller auction size, demand remained strong, with the one-year bills oversubscribed.
At Nigeria’s latest Treasury bills (T-bills) auction on Wednesday, the Debt Management Office (DMO) saw the yield on the one-year T-bill drop to 29.51%, down from 29.75%.
This marks the second consecutive decline, following a peak of 30.70% three auctions ago.
Despite this, investor demand remained strong.
The DMO offered ₦275.71 billion across various tenors but sold ₦527.83 billion—more than double the one-year bill’s offer of ₦256.51 billion.
Meristem analysts had expected a slight moderation in yields, supported by the DMO’s decision to reduce the auction size by 52.73%, from ₦583.26 billion at the previous auction.
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While the Central Bank’s recent interest rate hike to 27.50% aimed to tackle inflation, T-bill yields have not risen, as they had already peaked before the hike.
In addition, the recent Open Market Operations (OMO) auctions on December 6 and 9 saw no sales except for long-end instruments, with rates on those holding steady at 23.98%.
Looking ahead, analysts expect the DMO to keep stop rates below 23% in future auctions.
However, liquidity concerns could add some uncertainty to the market.
Meanwhile, interest in shorter-dated T-bills remained low.
The 182-day bill was oversubscribed by ₦10.61 billion but saw only ₦7.03 billion allotted.
Yields on the 182-day and 91-day bills remained unchanged at 20.39% and 18.86%, respectively.
Given the fluctuating liquidity, analysts predict that rates will remain stable, with a slight downward bias in the coming weeks.
