Market News
Rate cut uncertainty, tariff wars spark demand for 91-day NT-bills - BUSINESSDAY
he 91-day Nigerian Treasury bills (T-Bills), in an unusual event, saw double the N50 billion amount offered on it by the Central Bank of Nigeria (CBN) as fear of global tariffs sees investors locking in on shorter instruments.
Ayodeji Ebo, Managing Director/Chief Business Officer of Optimus by Afrinvest, explained that the increase in demand could be a result of an increase in yield on the tenure, making it more attractive.
“Also, it could be that investors moved from locking in on one-year bills to buying shorter bills as expectations of a rate cut declined due to the global turmoil in the financial markets caused by the tariff war,” Ebo said.
On Wednesday, the yield on the 91-day bill rose to 19.41 percent from 18.86 percent at the last auction, the highest yield on the instrument since August 2025.
Similarly, the 181-day tenor also saw an uptick in its yield to 21.62 percent from 20.39 percent.
Last Wednesday, President Trump introduced new tariffs. He put a 10 percent tariff on almost all imports into the U.S., except for goods from Canada and Mexico. This led to huge sell-offs across several financial markets around the world and raised fears of recession.
However, later on Wednesday this week, Trump put a pause on these tariffs, causing a return to order.
Demand for the short bill rose to its highest since June last year, to N114 billion on Wednesday from N38 billion at the last auction.
Samuel Gbadebo, analyst at CardinalStone, said that the reason DMO reduced the total offer size and priced the short- and mid-tenor instruments at higher rates.
“This appears to be a deliberate strategy to manage the government’s long-term borrowing costs,” Gbadebo said.
He noted that there was notable investor hawkishness at the long end of the curve, with bids coming in around 20% and the high 19% range.
“ It seems the DMO was not comfortable accepting those levels and preferred to limit exposure at those tenors. This move may be a subtle signal that the authorities are still committed to maintaining relatively lower yields on the long end, at least for now,” he said.
As usual, the one-year bill saw high demands reaching N905.6 billion, and only N206.9 billion was sold by the CBN. The yield on it remained at 24.4 percent.
Matilda Adefalujo, fixed income analyst at Meristem, said that at the auction yesterday, there were more bids for the 91 and 364 tenors.
She explained that the surprise close rate for the 182-day caused a buying reaction this morning.
“ For the 364, it was within expectations, right now it’s difficult getting offers as there are barely any sellers in the market, which is surprising for a new issue,” she said.
A total of N425 billion in total was sold at the auction on Wednesday.
