Nigeria’s money market recorded a sharp divergence in March 2026 as treasury bills (T-bills) sold by the Debt Management Office (DMO) rose to N3.2 billion, representing a 10.37 per cent increase from February’s N2.8 billion.

At the same time, commercial paper (CP) issuance dropped to N34 billion, a 58.45 per cent decline from N82.18 billion in the previous month.

The contrast is an indication of a clear shift in investor preference toward government-backed securities amid stronger demand for risk-free instruments, elevated yields in the sovereign space and tightening conditions in the corporate short-term funding market.

The increase in T-bill issuance reflects sustained activity in the short-term government securities market, where investors continued to show a strong appetite for safe, liquid instruments.

Operators noted that the robust uptake was supported by attractive stop rates and persistent liquidity management operations by the authorities, which kept demand anchored in the fixed income space.

According to them, the rise also highlights the continued role of Treasury bills as a key funding and monetary policy tool, used not only to meet short-term government financing needs but also to absorb excess liquidity within the financial system.

The strong subscription levels suggest that institutional investors, particularly deposit money banks and asset managers, remained heavily positioned in sovereign instruments during the period.

In contrast, activity in the CP market weakened significantly, with only 10 CP issues quoted in March 2026, compared to higher volumes in the previous month. The total value of N34.14 billion represents a sharp contraction in corporate short-term fundraising, pointing to a temporary slowdown in issuance appetite among corporates.

Operators attribute the decline to a combination of factors, including earlier front-loading of funding in February, higher relative borrowing costs in the CP market, and increased competition from government securities, which continue to offer more attractive risk-adjusted returns.

As a result, corporates appear to have either postponed issuance plans or relied more on internal funding and bank credit lines.

The widening gap between treasury bills and commercial paper activity highlights a broader structural trend in Nigeria’s money market, where sovereign instruments continue to dominate investor allocation decisions, particularly in periods of cautious risk sentiment and elevated interest rates.

They noted that March 2026 data points to a financial system increasingly skewed toward government securities, with corporate funding conditions remaining sensitive to liquidity cycles, pricing dynamics, and investor risk appetite.

Vice President of Highcap Securities Limited, David Adonri, said an increase in MoM issuance of TBs by DMO indicates that the shortfall in FGN’S revenue collection to finance recurrent expenditure is increasing.

Adonri pointed out that this also crowds out funds from the productive economy while simultaneously fueling inflation.

In addition, he said, further listing of CPs on NGX can increase issuers’ and investors’ participation in the capital market.

“It offers a good opportunity for investors to earn high returns from short-term investments compared to leaving the deposits in bank accounts. It is also a potent mechanism for diversification and financial management,” he said.