By theG&BJournal
SAT FEB 28 2026-theGBJournal| Activity across Treasury bills and FGN bonds reflected cautious positioning, with pockets of buying interest in select maturities offset by profit-taking in others, as investors digested a raft of new macroeconomic data and policy signals.
Market participants weighed fresh inflation numbers, liquidity conditions, and evolving guidance from the Central Bank of Nigeria, resulting in a broadly uneven yield movement across the curve.
Bearish sentiments prevailed in the Treasury Bills secondary market during the week following the underwhelming 50bps cut.
The average yield across all instruments rose by 23bps to 19.2%. Across segments, average NTB yields declined by 22bps to 17.2%, while average OMO yields advanced by 67bps to 21.2%.
The Central Bank of Nigeria (CBN) conducted an OMO auction to mop up excess liquidity, offering NGN600.00 billion across the 6, 104, and 167-day maturities. Eventually, a total of N1.11 trillion was issued at stop rates of 21.94%, 18.45%, and 18.77%, respectively.
Given our expectation of robust system liquidity, we anticipate yields in the Treasury bills secondary market to moderate. Furthermore, the DMO is scheduled to conduct an NTB PMA next Wednesday (March 4), with N1.05 trillion worth of bills on offer.
The FGN bond market closed the week bullish, with average yields declining by 48bps to 15.5%, despite notable volatility.
Sentiment was initially cautious as participants focused on the primary bond auction. Following the DMO’s under allocation and stop rates that cleared prevailing secondary market levels below, the market reacted strongly bullish, triggering renewed buying interest across the curve.
Subsequently, investors positioned for a sizable MPC rate cut, driving yields lower. However, sentiment reversed after the rate decision fell short of expectations, prompting improved offers from local investors before the market ultimately stabilised into the week’s close.
Across the curve, the average yield decreased at the short (-36bps), mid (-71bps), and long (-64bps) segments following demand for the FEB-2031 (-82bps), MAR-2035 (-110bps) and MAR-2036 (-104bps) bonds, respectively.
At Monday’s FGN bond auction, the Debt Management Office (DMO) reopened the JUN-2032, MAY-2033 and FEB-2034 bonds, offering a total of N800.00 billion. Total demand settled at N2.70 trillion (bid-to-offer: 3.4x), with the DMO eventually allotting N524.28 billion (bid-to-cover: 5.1x). The stop rate on the FEB 2034, which was on-the-run last month, declined by 200bps to 15.50%.
Over the medium to long term, FGN bond yields are likely to pare, driven by expectations of a sustained easing cycle and sizable liquidity in the financial system.
Meanwhile, the Overnight rate (OVN) rate moderated by 54bps to 22.2%, as robust system liquidity conditions persisted.
Liquidity was primarily supported by inflows from OMO maturities (N730.70 billion) and FGN bond coupon payments (N656.08 billion), as well as the recent 50bps reduction in the MPR, which collectively offset debits of N1.11 trillion from OMO sales and N524.27 billion from FGN bond PMA.
Consequently, system liquidity remained firmly positive, with the average net long position settling at NGN3.14 trillion, compared with NGN2.94 trillion in the prior week.
X-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com|govandbusinessj@gmail.com
