Nigeria's Treasury bill yields climbed slightly at Wednesday's primary market auction despite ample liquidity in the financial system. Investors continued to demonstrate strong appetite for government securities across all tenors.
The Central Bank of Nigeria released results showing the 364-day bill closed at 16.35 percent. That's up from 16.15 percent two weeks earlier on May 20.
One-year paper dominated investor interest at the auction. Subscriptions hit N1.95 trillion against just N500 billion on offer, with the CBN allotting N1.24 trillion of that amount.
Ayodeji Ebo, managing director at Afrinvest Securities, told reporters the auction went smoothly. "The latest Treasury Bills auction closed with strong demand, especially on the 364-day paper, as investors continued to lock in attractive yields," he noted.
Shorter-dated instruments also performed well on the day. The 91-day bill attracted N131.18 billion in subscriptions against N100 billion offered, receiving full allotment at a new stop rate of 16.05 percent.
Its previous rate stood at 15.95 percent. Investors clearly preferred moving up the yield curve where returns looked more attractive.
The 182-day paper drew N83.55 billion in bids for N50 billion available. Authorities allotted N82.98 billion, with the stop rate rising to 16.19 percent from 16.14 percent.
Ebo observed that investors kept favoring longer-maturity instruments across the board. According to him, the 364-day bill particularly appealed to those seeking near-20 percent annualized returns.
Stop rates printed slightly higher than some analysts had predicted. Meristem had projected broadly stable pricing ahead of the auction.
The firm cited strong system liquidity and reinvestment flows as reasons for its forecast. "Demand is likely to be supported by reinvestment flows and continued investor preference for short-dated government securities," Meristem wrote before the event.
Banking system liquidity appeared robust during the auction window. Meristem estimated maturities at roughly N464.6 billion against N700 billion in total offers.
Overall liquidity in the banking system ranged between N5.5 trillion and N6.3 trillion. These conditions provided strong support for government borrowing operations.
Wednesday's result marks a shift from the recent trend of declining yields. The 364-day rate had fallen from 16.73 percent in early March before recovering this week.
Market watchers expect Treasury bill demand to stay healthy. System liquidity and investor hunger for safe assets should continue supporting the market going forward.
