The Nigerian Treasury bills secondary market recorded a positive trading session on Monday, October 12, 2026, as increased demand for short-term government securities pushed the average market yield lower.
According to the Daily Market Update released by Cordros Securities, the average Treasury bills yield declined by two basis points to 17.9 per cent.
The development reflected buying interest across different segments of the Treasury bills market.
Meanwhile, the overnight lending rate in the money market declined by 13 basis points to approximately 20.7 per cent, indicating an easing in short-term interbank funding costs.
Treasury Bills Attract Buying Interest
The Cordros report showed that the Treasury bills secondary market traded on a bullish note.
Average yields declined across short-, medium- and longer-dated instruments.
In the short-term segment, the average yield contracted by two basis points.
The medium-term segment recorded a three-basis-point decline, while the longer-term segment eased by one basis point.
The movements were supported by demand for selected Treasury bills with 73, 178 and 346 days remaining to maturity.
Each of these instruments recorded a yield decline of approximately three basis points.
Why Falling Yields Matter
Treasury bills are short-term debt instruments issued by the Federal Government through the Central Bank of Nigeria.
They are used to raise funds and support monetary and liquidity management.
In the secondary market, Treasury bill prices and yields generally move in opposite directions.
When investors purchase existing bills at higher prices, the yield available to new buyers may decline.
Consequently, falling yields can indicate stronger demand for the securities.
However, the latest decline was relatively modest and does not necessarily signal a sustained downward trend.
OMO Securities Record Sharper Yield Decline
The Open Market Operations segment also recorded significant buying interest.
According to Cordros, the average OMO yield declined by 74 basis points to 17.9 per cent.
OMO securities are used by the Central Bank of Nigeria as part of its monetary policy and liquidity management operations.
Movements in OMO yields can influence investment decisions in the broader fixed-income market.
The sharp decline recorded during the session suggests a stronger price adjustment in this segment compared with conventional Treasury bills.
However, the report did not provide a detailed breakdown of all transactions responsible for the movement.
Overnight Lending Rate Falls to 20.7%
Conditions in the interbank money market also eased.
The overnight lending rate declined from 20.85 per cent on October 9 to 20.72 per cent on October 12.
This represented a reduction of 13 basis points.
Cordros attributed the movement to the absence of significant funding pressure within the banking system.
The overnight rate reflects the cost at which financial institutions obtain very short-term funds from one another.
A decline can indicate relatively comfortable liquidity conditions.
However, short-term money market rates can change quickly in response to government securities settlements, liquidity withdrawals and other financial transactions.
October Treasury Bills Auction Attracts Attention
The report also provided information on the Federal Government’s Treasury bills auction conducted on October 7.
At that auction, the 91-day Treasury bill stop rate remained unchanged at 15.50 per cent.
The 182-day stop rate was also unchanged at 15.80 per cent.
However, the 364-day stop rate declined to 15.85 per cent from 15.89 per cent at the previous auction.
The reported auction allotment amounted to ₦968.47 billion, compared with ₦497.58 billion at the September 23 auction.
The figures indicate a larger volume of securities allotted at the latest auction.
Investors Compare Short-Term Returns
Treasury bills remain an important investment instrument for financial institutions and other eligible investors seeking exposure to short-term government securities.
Investment decisions often depend on expected returns, liquidity requirements and prevailing interest rates.
The difference between primary auction stop rates and secondary market yields is also important.
Primary auction rates apply to newly issued instruments, while secondary market yields reflect prices at which existing securities are traded.
Investors should therefore distinguish between the two when assessing available opportunities.
Fixed-Income Market Outlook
The latest decline in Treasury bills yields suggests that demand remained supportive during the October 12 trading session.
However, future movements will depend on market liquidity, Central Bank operations, government borrowing requirements and investor expectations.
Additional securities issuance could absorb available funds, while stronger demand could support bond and bill prices. For now, the market update points to relatively stable money market conditions and renewed interest in short-term government securities.
