SAT DEC 20 2025-theGBJournal|The Treasury bills market closed the week on a bearish footing as investors sold off positions to participate at the NTB PMA. Consequently, the average yield across all instruments increased by 7bps to 19.8%.
Across segments, average NTB yields increased by 3bps to 17.8%, while average OMO yields rose by 19bps to 22.0%. At Wednesday’s NTB PMA, the Debt Management Office (DMO) offered N700.00 billion in bills, with total subscriptions reaching N1.51 trillion (bid-to-offer: 2.2x).
Eventually, the DMO sold N704.07 billion (bid-to-cover: 2.1x), increasing stop rates on the 91-Day to 15.50% (Previous: 15.30%) and the 182-Day to 15.95% (Previous: 15.50%), while the stop rate on the 364-Day bill declined to 17.51% (Previous: 17.95%).
With system liquidity expected to improve next week, we anticipate stronger demand for T-bills, which should drive yields lower.
The FGN bond secondary market traded on a bearish footing, pressured by the sharp uptick in marginal rates at Monday’s primary auction and continued year-end portfolio optimisation.
Consequently, the average yield increased by 7bps at 16.7%.
Across the curve, the average yield increased at the short (+26bps) end following selloffs of the JAN-2026 (+234bps) bond, while it declined at the long (-1bp) end driven by demand for the JUNN-2053 (-5bp) bond. Meanwhile, the average yield closed flat at the mid segment.
At the auction, the DMO reopened the AUG-2030 and JUN-2032 bonds, offering a total of N460.00 billion. Total demand settled at N890.61 billion (bid-to-offer: 1.9x), with the DMO eventually allotting N596.47 billion (bid-to-cover: 1.3x).
Stop rates cleared higher at 17.20% for AUG-2030 and 17.30% for JUN-2032, compared with 15.90% and 16.00% at the previous auction.
Next week, we expect bond yields to ease as investors take advantage of the elevated yield environment, with improved system liquidity also likely to bolster demand for bonds.
Meanwhile at the money market, The over night (OVN) rate expanded by 8bps to 22.8% as debits for the FGN Bond PMA (N596.47 billion) outweighed inflows of NGN 537.75 billion from OMO maturities.
As a result, average system liquidity tapered, closing at a net long position of N2.92 trillion (prior week: N3.28 trillion).
Barring any liquidity management measures, we expect inflows from OMO maturities (N400.00 billion), NTB maturities (N281.53 billion) and FGN Bond coupon payments (N216.76 billion) to boost system liquidity, thereby causing the OVN rate to pare.
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