SAT NOV 07 2026-theGBJournal| Nigeria’s fixed-income market sustained its bullish momentum during the week, with Treasury bill and Federal Government of Nigeria (FGN) bond yields declining amid resilient investor demand and elevated banking system liquidity.
Average Treasury bill yields contracted by 2 basis points (bps) to 18.2%, while FGN bond yields fell by 3bps to 16.3%, despite fresh liquidity mop-up operations by the Central Bank of Nigeria (CBN).
In the money market, the Overnight (OVN) rate declined by 18bps week-on-week to 20.2%, even as NGN5.72 trillion in Open Market Operations (OMO) primary market auction debits outweighed NGN2.02 trillion in OMO maturities.
Consequently, average system liquidity moderated to a net long position of NGN7.20 trillion, down from NGN8.05 trillion in the previous week, reflecting the impact of the CBN’s liquidity mop-up operations.
Liquidity conditions are, however, expected to remain supportive next week, with anticipated OMO maturities of NGN2.30 trillion likely to inject fresh funds into the banking system.
Further CBN mop-up operations could, however, temper the expected liquidity surplus.
The Treasury bills secondary market maintained its bullish trajectory, with average yields across instruments declining by 2bps to 18.2%, supported by strong investor demand following undersubscribed allotments at the primary market auctions.
Average Nigerian Treasury Bills (NTB) yields fell by 2bps to 17.9%, as unmet demand at Wednesday’s primary market auction (PMA) spilled into the secondary market.
Similarly, OMO bill yields contracted by 6bps to 18.6%, reflecting increased buying interest following unmet bids at Tuesday’s auction.
At Wednesday’s (November 4) NTB auction, the Debt Management Office (DMO) offered NGN800.00 billion across the three tenors, attracting total subscriptions of NGN2.05 trillion.
However, the DMO allotted NGN509.40 billion, leaving a substantial portion of investor demand unmet.
Stop rates remained unchanged at 15.40%, 15.79% and 15.80% for the 91-day, 182-day and 364-day instruments, respectively.
In the OMO market, the CBN’s Tuesday (November 3) auction attracted NGN3.52 trillion in subscriptions against an offer of NGN1.50 trillion.
The apex bank allotted NGN2.95 trillion, with stop rates settling at 17.77%, 17.71% and 17.67% across the 119-day, 126-day and 133-day tenors, respectively.
Investor appetite strengthened further at Friday’s (November 6) OMO auction, where subscriptions surged to NGN5.74 trillion against an offer of NGN1.50 trillion.
The CBN ultimately allotted NGN2.72 trillion, while stop rates settled at 17.25%, 16.54% and 15.74% for the 179-day, 270-day and 361-day instruments, respectively.
Looking ahead, the Treasury bills secondary market is expected to sustain its broadly bullish bias, supported by resilient domestic investor demand, substantial system liquidity and continued reinvestment interest.
The FGN bond secondary market also closed the week on a positive note, with average yields declining by 3bps to 16.3%, as renewed investor demand outweighed pockets of selling pressure across the benchmark curve.
A breakdown of the yield curve showed divergent movements across maturities.
Average yields at the short end expanded by 9bps, driven largely by selloffs in the March 2027 bond, whose yield rose by 36bps.
Conversely, yields at the mid and long segments contracted by 4bps and 6bps, respectively, reflecting increased demand for the June 2032 and June 2038 bonds, which recorded yield declines of 22bps and 21bps.
Over the medium term, the Federal Government’s planned increase in domestic borrowing is likely to sustain upward pressure on bond yields as additional supply competes for investor funds.
However, the ongoing monetary easing cycle, sustained foreign portfolio investment inflows and continued disinflation are expected to provide counterbalancing support, moderating the pace of any potential yield increases.
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