The Central Bank of Nigeria, CBN, will open its midweek Treasury bill auction for sales to investors at the primary market auction today. The primary market auction will see a total of N550 billion worth of Nigerian Treasury bills in offer across standard maturities.

Fixed income market analysts predict that the auction will be oversubscribed, reflecting buying sentiment on the naira assets despite a huge deficit in the banking system.

The financial system liquidity expanded by 73% to open at ₦171.05 billion, pushing the short-term benchmark interest rates higher by over 15 bps to close at 32.25% and 32.67%, respectively.

Spot rates are also expected to decline as part of efforts to reduce Nigerian government borrowing costs, as the country’s headline inflation rate moderated sharply in February while the benchmark interest rate remained unchanged.

Banks, assets managers, and other market participants have raised their appetite for Nigerian bills amidst a positive real return on investment. In the secondary market, transactions softened on Tuesday, with limited activity concentrated at the mid-to long ends of the curve, traders said in separate notes.

Overall performance was muted as market participants focused on preparing their bids for the upcoming auction. On the day, the average benchmark yield declined by 2 bps to 18.91%.