Market News

Nigeria’s one-year Treasury bill auction witnessed a further decline in its yield of its first Treasury Bills (T-Bills) Primary Market Auction for the year 2025 on Wednesday.

At the auction, the yield on the one-year bill dropped to 29.21 percent from 29.65 percent, the second consecutive decline.

The yield on the one-year NT-bills peaked at 30.70 percent in 2024 before it began to decline.

Analysts at Meristem had projected in an earlier report that it anticipates that stop rates for the offered instruments will remain relatively stable, with a slight likelihood of further moderation in the yield of the 364-day tenor.

“The robust system liquidity of N797.66billion as of January 7, 2025, supports the case for lower stop rates. Furthermore, the CRR refund on Tuesday is likely to increase banks’ participation in the auction. Coupled with the government’s emphasis on managing borrowing costs, these factors point to a higher probability of stable or marginally reduced stop rates at tomorrow’s auction,” it said.

System liquidity remained positive this week, opening N459.79 billion long on Wednesday.

The CBN sold N515 billion worth of NT-bills at the auction yesterday, the exact sum was put up for sale across all tenors, exceeding the N74.41billion maturing.

This is attributed to the oversubscription on the one-year T-bills, selling N473.26 billion which is 23 percent more than its offer of N385 billion.

In November, the Cardoso led Monetary Policy Committee jacked up the interest rate for the sixth time this year by 25 basis points to 27.50 percent to combat rising inflation.

Since the last hike in benchmark rates yields on the NT-bills have slowly declined.

Cardoso has also hinted in recent speech that there will likely be a downward trend in the tight monetary policy stance in 2025.

Hence, analysts at CardinalStone perceive that CBN is close to activating a rate cut and see legroom for a cumulative downward rate adjustment of between 100 —200 basis points in the second half of 2025.

This factor alongside lower local borrowing compared to 2024 and low liquidity tolerance has led analysts at CardinalStone to project moderation in yields later in the year.

“ Overall, we expect yields to be mostly stable in H1’25 before moderating in the second half of the year,” it stated.

Similarly, Afrinvest in its 2025 outlook report stated that yields on fixed income instruments are likely to stay elevated especially in the first half of 2025.

The 182-days and 91-days treasury bills saw minimal interest by investors. Only N20.48 billion of the N80 billion 182-days bill was sold. Likewise the 91-days bill only 21.3 billion was sold.

Yields on the 182-day and 91-day bills remained the same for the eighth consecutive auction at 20.39 percent and 18.86 percent respectively.