SAT AUG 01 2026-theGBJournal| Nigeria’s fixed-income market extended its rally this week as strong investor demand compressed Treasury bill and bond yields, even as liquidity conditions tightened following heavy liquidity mop-up operations by the Central Bank of Nigeria (CBN) and the Debt Management Office (DMO).
The combination of outsized auction demand, falling stop rates and robust secondary market buying underscored investors’ continued appetite to lock in yields amid expectations that rates may have peaked.
Money market conditions were marginally tighter during the week, with the overnight (OVN) lending rate edging up by 2 basis points week-on-week to 22.1%.
The increase reflected the impact of aggressive liquidity sterilisation by the monetary authorities, as a ₦3.48 trillion Open Market Operations (OMO) auction and ₦1.25 trillion in net Treasury bill auction debits outweighed ₦2.19 trillion of OMO maturities returning to the banking system.
Consequently, average system liquidity eased to a net long position of ₦3.42 trillion, compared with ₦3.51 trillion in the previous week.
Despite the modest tightening in liquidity, sentiment in the Treasury bills secondary market remained firmly bullish.
Average yields across instruments fell by 14 basis points to 19.2%, driven largely by investors redirecting unsuccessful bids from the primary market into outstanding securities.
The spillover demand highlighted the persistent shortage of investible instruments relative to investor liquidity.
Performance was positive across market segments, with average yields in the Nigerian Treasury Bills (NTB) and OMO secondary markets declining by 4 basis points and 7 basis points to 18.2% and 21.3%, respectively.
The week’s Treasury bills primary auction reinforced the strength of investor demand.
The DMO offered ₦700 billion across the three standard maturities but attracted subscriptions of ₦3.62 trillion, more than five times the amount on offer.
Responding to the overwhelming demand, the DMO allotted ₦1.25 trillion, while the stop rate on the benchmark 364-day bill fell by 31 basis points to 17.35%.
Stop rates on the 91-day and 182-day instruments were maintained at 16.30% and 16.50%, respectively, signalling sustained investor appetite despite lower yields.
The CBN’s OMO auction also recorded exceptionally strong demand. Against an initial offer of ₦600 billion, investors submitted bids worth ₦3.48 trillion, prompting the apex bank to allot the entire amount bid.
Stop rates settled at 20.60%, 20.29% and 20.15% for the 91-day, 119-day and 133-day maturities, respectively, reflecting the CBN’s continued use of OMO instruments to absorb excess liquidity while maintaining an attractive premium over Treasury bills.
The bullish momentum extended to the Federal Government bond market, where sustained buying by pension funds and other domestic institutional investors pushed average secondary market yields down by 29 basis points to 17.1%.
Demand was broad-based across the yield curve, with average yields declining by 34 basis points at the short end, 33 basis points in the belly of the curve and 17 basis points at the long end.
The strongest buying interest was concentrated in the March 2027, April 2032 and April 2037 benchmark bonds, whose yields fell by 72 basis points, 55 basis points and 47 basis points, respectively.
The week’s trading pattern suggests investors remain eager to secure high-quality sovereign securities despite tighter liquidity conditions, with robust institutional demand continuing to support valuations across Nigeria’s fixed-income market.
“The week’s performance reflected persistent demand for sovereign securities despite tighter liquidity conditions.
Oversubscription at both the Treasury bill and OMO auctions left significant unmet demand, which spilled into the secondary market and drove yields lower.
Institutional investors also continued to lock in attractive real returns, supporting the rally in FGN bonds,” fixed-income analysts said.
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