SAT SEPT 13 2025-theGBJournal| Treasury yields were lower on Friday, as the FGN bonds and Treasury Bills markets weigh potential rate cut at the upcoming Monetary Policy Committee meeting this month.
The FGN bond average yield dropped by 29bps to 16.7%. Across the benchmark curve, the average yield decreased at the short (-17bps), mid (-42bps), and long (-1bp) segments, driven by demand for the JUL-2030 (-76bps), FEB-2031 (-93bps), and JUN-2053 (-7bps) bonds, respectively.
Market players say they expect the bullish sentiment to persist in anticipation of a dovish tilt at the September MPC meeting, combined with elevated system liquidity.
Meanwhile, the Treasury bill secondary market traded with bullish sentiments, driven by strong interbank liquidity. Consequently, the average yield decreased by 25bps w/w to 21.8%.
By segment, OMO yields contracted by 71bps to 24.8%, offsetting a 22bps increase in NTB yields to 18.8%.
The decline in OMO yields is attributed to the absence of OMO issuance by the Central Bank of Nigeria (CBN), which has led to increased demand in the secondary market.
The robust system liquidity is also expected to spur demand for bills, causing yields to taper marginally.
Additionally, the Debt Management Office (DMO) is scheduled to conduct an NTB PMA next Wednesday (September 17), with N290.00 billion worth of bills on offer.
The overnight (OVN) rate declined marginally by 4bps to 27.0% as the absence of any liquidity management measures by the CBN caused system liquidity to remain sturdy.
As a result, the system’s net long position increased to N1.95 trillion (vs. N1.47 trillion in the prior week).
Next week, if there is an absence of mop-up activities by the apex authority, inflows from FGN bond coupon payments (N141.71 billion) is expected to boost system liquidity, causing the OVN rate to remain depressed.
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