WED JULY 29 2026-theGBJournal| Nigeria’s fixed-income market extended its rally on Tuesday as a wave of liquidity released by the maturity of N2.19 trillion in Open Market Operation (OMO) bills strengthened investor demand for government securities, pushing yields lower across both Treasury bills and Federal Government of Nigeria (FGN) bonds.
The influx of cash into the banking system eased funding conditions, with the overnight lending rate falling six basis points to 22.2%, as banks found themselves awash with liquidity following the sizeable OMO redemption.
The improved liquidity environment reinforced demand in the Treasury bill secondary market, where the average yield declined by two basis points to 18.2%.
Investors continued to deploy excess cash into short-term government securities, extending a rally that has gathered momentum in recent sessions.
Buying was concentrated in the mid- and long-tenor bills, where yields fell by three and four basis points respectively, led by strong demand for the 114-day bill, whose yield declined 23 basis points, and the 233-day paper, which dropped 36 basis points.
The short end of the curve bucked the trend, however, with the average yield rising four basis points as investors took profits on the 72-day bill, pushing its yield up 18 basis points.
Yields in the OMO secondary market were unchanged at 21.3%, reflecting relatively balanced positioning.
The bullish sentiment also spilled into the sovereign bond market, where the average FGN bond yield fell six basis points to 17.0%.
Demand was broad-based across the curve, signalling investors’ willingness to lock in yields amid expectations that abundant system liquidity will continue to support bond prices.
Yields at the short end declined nine basis points, supported by buying in the February 2028 bond, while the mid-segment eased two basis points following demand for the March 2035 issue.
Longer-dated securities also attracted strong interest, with the April 2049 bond leading gains as its yield dropped 34 basis points, pulling the long end of the curve down five basis points.
Market participants said the rally continues to be driven primarily by the substantial liquidity injection from OMO maturities, which has left investors with limited reinvestment alternatives.
Expectations that system liquidity will remain comfortable in the near term have encouraged portfolio managers to increase exposure to government securities, compressing yields across the fixed-income market.
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