The Nigerian Treasury Bills secondary market maintained a strong bullish trajectory last week as an unprecedented surge in system liquidity pressured yields downward, according to the latest fixed-income analysis from Afrinvest Securities on Tuesday.
The financial system opened the second quarter with an N6.19tn long position as of Wednesday, 1 April 2026. This robust liquidity pool reignited investor appetite for short-term government securities, leading to a significant rebound in demand and a subsequent decline in the average benchmark yield.
“Last week, trading in the Nigerian Treasury Bills secondary market remained bullish, driven by robust system liquidity,” the Afrinvest report noted, adding that “the average yield in the local market declined by 15 bps W-o-W to 17.61 per cent, from 17.76 per cent in the previous week.”
A granular assessment of the market revealed that the long end of the curve was the primary beneficiary of this demand. Specifically, the 17-Dec-2026 and 10-Dec-2026 maturities saw their yields plunge 95 bps and 83 bps, respectively. This rally resulted in an average yield contraction of 29 bps at the long end, whereas performance across the short and mid-segments remained comparatively mixed.
In the sovereign bond space, the FGN bond market displayed a more measured performance. While investors demonstrated a preference for shorter-duration instruments to maintain liquidity, the average benchmark yield saw a marginal uptick of 1 bp to settle at 15.79 per cent.
“Yields at the short end dipped slightly by 1 bp to 16.13 per cent, showing that investors still favour instruments with shorter duration and better liquidity,” the analysts observed. Conversely, the mid-tenor segment faced selling pressure, with yields rising by 14 bps, while the long end saw a 3 bps decline as investors moved to secure current yield levels.
Looking ahead, the market is bracing for a high-volume Primary Market Auction scheduled for Wednesday, 8 April 2026. The Debt Management Office is expected to offer N700bn in bills, comprising N100bn each for the 91-day and 182-day tenors and N500bn for the 364-day tenor, to refinance N356.47bn in maturing obligations.
Market sentiment for the upcoming week is expected to be dictated by the interplay between this massive auction and the prevailing liquidity conditions. Given the current environment, Afrinvest has advised market participants to remain strategic in their allocations.
“We advise investors to trade on relatively attractive maturities across the curve and look out for available commercial paper and other corporate issues on offer,” the firm concluded. This recommendation comes as the DMO also proceeds with a N750bn FGN bond offer across the August 2030, June 2032, and May 2033 maturities.
Investors often rush to long-term bonds when they suspect that interest rates have peaked. By buying a bond now at a high rate, they ‘lock in’ that return before the Central Bank of Nigeria potentially lowers rates in the future.
The 1 bp uptick in general FGN bonds suggests a ‘wait-and-see’ approach, where investors are moving money out of the mid-term (5–7 years) and into either very short-term liquidity or very long-term security.
