…The FGN bond secondary market closed weaker, with average yields rising 20bps to 16.0% as investors trimmed positions ahead of the DMO’s expected bond auction on Monday.
SAT APRIL 25 2026-theGBJournal| Nigeria’s fixed income market ended the week with a mixed tone as robust system liquidity kept funding conditions broadly comfortable, even as investors repositioned across Treasury bills and FGN bonds.
While liquidity remained in surplus, heavy participation at OMO and NTB auctions drove mild pressure in the money market, pushing the overnight (OVN) rate slightly higher and prompting a cautious selloff across the secondary fixed income market.
The OVN rate inched up by 4bps week-on-week to 22.2% as OMO primary market auction debits of N1.92 trillion offset inflows from N2.16 trillion in OMO maturities.
As a result, system liquidity moderated slightly but remained firmly positive, with banks maintaining an average net long position of N3.86 trillion compared with N4.03 trillion in the previous week.
Despite the uptick in funding costs, liquidity conditions remained supportive and should keep short-term rates broadly anchored.
Looking ahead, analysts at Cordros Research projects liquidity conditions are expected to stay strong, supported by N1.63 trillion in OMO maturities and N260.67 billion in FGN bond coupon inflows.
In the absence of any aggressive liquidity mop-up by the Central Bank of Nigeria (CBN), this should ease funding pressures in the interbank market and create room for a moderation in the OVN rate.
In the Treasury bills market, sentiment turned mildly bearish as average secondary market yields rose by 10bps to 18.9%, driven largely by investor profit-taking and portfolio rebalancing ahead of this week’s NTB and OMO auctions.
NTB yields edged up by 3bps to 17.5% as investors unwound positions to participate in the DMO auction, while OMO yields climbed 39bps to 21.2% on similar sell pressure ahead of the CBN sale.
At Wednesday’s NTB primary market auction, the DMO offered N750.00 billion across the 91-, 182- and 364-day tenors, attracting strong demand of N2.36 trillion.
Total allotments settled at N894.16 billion, with stop rates held steady at 15.95%, 16.19% and 16.20% respectively, reflecting sustained investor appetite despite elevated system liquidity.
Elsewhere, the CBN’s OMO auction also saw strong demand, with subscriptions of N2.22 trillion against an offer of N600.00 billion.
The apex bank ultimately allotted N1.92 trillion across the 7-, 91- and 140-day tenors at stop rates of 21.90%, 19.87% and 19.91%, underscoring persistent demand for short-dated instruments.
Next week, strong liquidity conditions are expected to sustain investor demand in the bills market, likely supporting further moderation in yields as excess cash continues to chase short-term fixed income instruments.
Meanwhile, the FGN bond secondary market closed weaker, with average yields rising 20bps to 16.0% as investors trimmed positions ahead of the DMO’s expected bond auction on Monday.
Selling pressure was concentrated at the short and mid segments of the curve, where yields rose 56bps and 19bps respectively, driven by markdowns on the MAR-2027 and APR-2029 papers.
In contrast, demand at the long end helped compress yields by 5bps, supported by buying interest in the JAN-2042 bond.
Over the medium term, FGN bond yields are still expected to trend lower, underpinned by strong domestic liquidity and sustained institutional demand.
However, the pace of yield compression may remain gradual, as elevated government borrowing needs and lingering offshore risk aversion continue to cap aggressive bullish positioning.
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