SAT JUNE 20 2026-theGBJournal| Nigeria’s fixed-income market ended the week under pressure, with Treasury bill and bond yields rising as investors positioned for the Debt Management Office’s (DMO) N1.20 trillion Federal Government bond auction scheduled for June 22, even as banking system liquidity remained firmly in surplus.
The overnight lending rate edged up 4 basis points week-on-week to 22.2%, as debits from the Treasury bill primary market auction totaling N1.31 trillion outweighed inflows from N1.15 trillion in maturing Open Market Operations (OMO) bills.
Despite the liquidity drain, conditions in the money market remained broadly comfortable, with the average net long position increasing slightly to N4.21 trillion from N4.19 trillion in the previous week.
In the Treasury bills secondary market, sentiment turned bearish, pushing average yields across instruments higher by 31 basis points to 19.2%.
The Nigerian Treasury bill segment recorded the sharpest adjustment, with average yields climbing 46 basis points to 18.2% as investors repriced securities following the DMO’s outsized N1.00 trillion issuance at Wednesday’s auction.
Yields in the OMO market also moved higher, rising 10 basis points to 21.1%.
At the primary auction, demand remained robust despite the larger supply. Total subscriptions reached N1.86 trillion, representing a bid-to-offer ratio of 1.9 times.
The DMO eventually allotted N1.49 trillion, while stop rates rose across all tenors, with the 91-day bill settling at 16.28%, the 182-day instrument at 16.50%, and the 364-day paper at 17.34%, representing increases of 23 basis points, 31 basis points and 99 basis points, respectively.
Selling pressure also dominated the Federal Government bond secondary market, where average yields rose 24 basis points to 16.9% as investors anticipated increased supply from next week’s primary auction.
The DMO is scheduled to raise N1.20 trillion through the reopening of the January 2035 and June 2037 bonds, offering N600 billion on each instrument.
Across the benchmark curve, yields at the mid-tenor segment rose by 35 basis points, driven largely by selloffs in the March 2036 bond, whose yield jumped 183 basis points.
The long end of the curve advanced by 6 basis points amid weakness in the April 2037 issue, while the short end bucked the trend, with yields falling 16 basis points on strong demand for the March 2027 bond, whose yield declined by 126 basis points.
The upcoming bond auction is expected to serve as a key test of investor appetite amid abundant system liquidity and rising yield expectations, with market participants likely to seek higher returns to absorb the sizeable issuance.
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