SAT SEPT 12 2026-theGBJournal|Nigeria’s fixed-income market ended the week on a firmer footing, with Treasury bill and Federal Government bond yields declining as strong demand at primary auctions spilled into the secondary market and renewed offshore interest supported longer-dated securities.
Money-market conditions, however, tightened modestly.
The overnight (OVN) rate rose 18 basis points week-on-week to 22.1%, as N4.40 trillion of Open Market Operations (OMO) and N982.81 billion of net Nigerian Treasury bills (NTB) primary-market auction (PMA) debits more than offset N3.07 trillion of OMO maturities.
Average system liquidity consequently fell to a net long position of N3.33 trillion, from N4.53 trillion a week earlier.
Despite the tighter liquidity position, the Treasury-bill secondary market rallied.
Average yields across instruments fell 16 basis points to 19.1%, suggesting that demand remained strong enough to absorb the liquidity drain from the central bank and government auctions.
NTB yields declined 11 basis points on average to 18.8%.
The move was supported by sizeable unmet demand at Wednesday’s NTB auction, with investors whose bids were not fully satisfied turning to the secondary market to secure exposure.
That demand helped push yields lower despite the relatively tight money-market conditions.
The auction itself highlighted the depth of investor demand. The Debt Management Office (DMO) offered N750 billion across the 91-, 182- and 364-day tenors, but received N2.64 trillion in subscriptions—more than three times the amount on offer.
The DMO ultimately allotted N1.05 trillion.
The strongest repricing was at the long end of the bill curve, where the 364-day stop rate fell 22 basis points to 16.62%.
Rates on the 91- and 182-day bills were unchanged at 16.30% and 16.50%, respectively, indicating that demand was particularly strong for longer-duration bills even as the issuer increased the final allocation above the advertised amount.
OMO bills also attracted demand in the secondary market, with average yields falling 23 basis points to 20.4%.
Renewed offshore buying provided an important source of support, reinforcing the broader yield compression and pointing to continued foreign appetite for naira fixed-income assets at prevailing return levels.
The primary OMO auction underscored the scale of that demand.
The Central Bank of Nigeria offered N1 trillion of bills on Tuesday but received N6.31 trillion in bids, more than six times the amount offered. It eventually allotted N4.40 trillion.
Stop rates at the OMO auction settled at 19.14% for the 84-day tenor, 18.49% for 147-day bills and 18.41% for the 154-day tenor.
The large oversubscription allowed the CBN to absorb significant liquidity while still meeting substantial investor demand.
The Federal Government bond market was similarly bullish.
Average bond yields fell 14 basis points to 16.5%, supported by demand from both domestic and offshore investors.
The rally was more pronounced at the long end of the curve, where investors appeared willing to extend duration as yields remained attractive.
Performance across the benchmark curve was nevertheless mixed.
Average yields increased by 2 basis points at the short end and 1 basis point in the middle of the curve, reflecting selling pressure in specific securities.
The February 2028 bond yield rose 10 basis points, while the April 2029 bond increased 5 basis points.
Those increases were more than offset at the long end, where average yields fell 14 basis points.
The July 2045 bond was the standout, with its yield declining 59 basis points as demand concentrated in the long-dated security.
The week’s price action points to a market in which liquidity management and investor demand are pulling in opposite directions.
The CBN and DMO absorbed substantial funds through their auctions, lifting the overnight rate and reducing aggregate system liquidity, but the resulting scarcity of available securities appears to have intensified demand in the secondary market.
Strong auction subscriptions, unmet NTB demand and renewed offshore participation all provided support for yields.
The sharp rally in the July 2045 bond also suggests that investors were prepared to lock in current yields at the long end despite near-term liquidity tightening.
For the coming sessions, the balance between further liquidity sterilisation, foreign participation and demand for duration is likely to remain central to the direction of Nigerian fixed-income yields.
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