…The Central Bank of Nigeria (CBN) returned to the OMO market on Friday (October 3) after several weeks of inactivity, offering N600.00 billion worth of bills.
SAT OCT 04 2025-theGBJournal| The fixed income market capitalization rose 0.11% to N51.24 trillion on Friday driven by strong system liquidity.
Bullish sentiments was seen both the treasury bills and FGN Bond markets.
The Treasury Bills average yield fell by 58bps w/w to 19.2%.
By segment, NTB and OMO yields declined by 6bps and 114bps to 17.9% and 20.5%, respectively.
The Central Bank of Nigeria (CBN) returned to the OMO market on Friday (October 3) after several weeks of inactivity, offering N600.00 billion worth of bills.
Total subscriptions reached NGN 3.32 trillion, representing a bid-to-offer ratio of 5.5x. However, the CBN sold only NGN98.00 billion, with stop rates of 20.49% and 20.61% on the 102D and 123D maturities, respectively.
Next week, strong system liquidity should sustain demand for bills, exerting further downward pressure on yields.
Similarly, the FGN bond secondary market sustained its bullish momentum, with the average yield down 24bps w/w to 16.3%.
Cordros Research analysts attribute this to investors’ reaction to lower-than-expected stop rates at the September PMA.
Across the curve, the average yield declined at the short (-31bps) and mid (37bps) segments, driven by demand for the JAN-2026 (-51bps) and JUN-2033 (-65bps) bonds, respectively, while it closed flat at the long end.
At Monday’s auction, the DMO reopened the AUG-2030 and JUN-2032 bonds with a total offer size amounting to N200.00 billion.
Despite robust subscription (N1.26 trillion; bid-to-offer: 6.3x), the Debt Management Office (DMO) underwrote N576.63 billion (bid-to-cover: 2.2x), setting stop rates at 16.00% (previously: 17.95%) and 16.20% (previously: 18.00%), respectively.
We expect demand in the FGN bond secondary market to remain strong, owing to the robust system liquidity and the recent MPR cut.
We also reiterate our expectations of a cautious stance at the long end of the curve, amid persistent concerns over fiscal sustainability and heightened duration risk.
Meanwhile, the overnight (OVN) rate remained unchanged at 24.9%, buoyed by inflows from OMO maturities (N731.14 billion), which outweighed debits from the FGN bond primary market auction (N 576.63 billion).
Consequently, the system’s net long position expanded materially to an average of N6.28 trillion (vs. N3.39 trillion in the previous week).
”If the CBN does not conduct another mop-up operation next week, we expect liquidity to remain robust, given the meagre sale (N98.00 billion) made by the CBN in today’s OMO auction. Thus, we expect the OVN rate to taper marginally,” says Cordros Research.
The fixed income market capitalization rose 0.11% to N51.24 trillion on Friday driven by strong system liquidity.
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