THUR JUNE 11 2026-theGBJournal| Nigeria’s short-term funding market saw a modest easing in borrowing costs on Wednesday, with the overnight lending rate declining by 10 basis points to 22.0% amid stable system liquidity and the absence of significant funding pressures across the banking sector.
Despite the softer interbank rate environment, sentiment in the fixed-income market remained bearish as investors continued to trim positions across Treasury bills and Federal Government bonds, pushing yields higher in the secondary market.
The Treasury bill market recorded widespread selloffs, with the average secondary market yield rising by 12 basis points to 17.7%. Yield expansion was observed across all segments of the curve, reflecting weaker demand and profit-taking activity among investors.
At the short end of the curve, average yields advanced by 4 basis points, driven primarily by sell pressure on the 59-day-to-maturity instrument, whose yield climbed 31 basis points.
The mid-segment also recorded a 4-basis-point increase following notable weakness in the 178-day Treasury bill, where yields rose by 15 basis points.
Meanwhile, the long end of the curve experienced the sharpest adjustment, with average yields increasing by 20 basis points as investors sold the 213-day bill, causing its yield to jump 46 basis points.
In contrast, the Open Market Operations (OMO) segment attracted renewed investor interest.
Average yields in the segment declined by 6 basis points to 21.0%, suggesting selective demand for higher-yielding central bank instruments despite the broader weakness in the Treasury bill market.
The Federal Government bond market mirrored the bearish trend seen in Treasury bills, with the average secondary market yield increasing by 9 basis points to 16.3%. Investors reduced exposure to selected benchmark securities, leading to higher yields across key maturities.
Selling pressure was most pronounced at the short end of the bond curve, where average yields rose by 23 basis points. The move was largely driven by the AUG-2030 bond, whose yield increased by 30 basis points.
At the long end, average yields gained 4 basis points following a selloff in the JUN-2053 bond, which saw its yield rise by 16 basis points.
The mid-segment of the curve remained largely unchanged, indicating a more balanced demand-supply dynamic for medium-dated maturities.
Meanwhile, activity in the foreign exchange market remained subdued.
The official exchange rate closed unchanged at NGN1,363.50 per U.S. dollar, reflecting continued stability in the Nigerian Foreign Exchange Market despite ongoing adjustments in domestic fixed-income assets.
The divergence between easing money market rates and rising fixed-income yields underscores investors’ cautious positioning as they reassess inflation expectations, monetary policy prospects and portfolio allocations across Nigeria’s debt market.
The broad-based increase in Treasury bill and bond yields suggests market participants continue to demand higher returns amid prevailing macroeconomic uncertainties, even as liquidity conditions remain relatively comfortable.
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