FMDQ’s reported market capitalisation plunged by N2.53 trillion over just two trading days in the first week of December, sliding from N89.52 trillion on Monday, December 8, to N86.99 trillion as at Tuesday, December 9.
The 2.82% drop reflects one of the steepest short-term losses this quarter across Nigeria’s fixed-income market.
The selloff was driven overwhelmingly by sharply lower bond prices, which pushed yields higher across almost all benchmark FGN bonds.
Prices fell “almost across the board” on December 9, reflecting broad repricing as investors demanded steeper compensation to hold duration at a time of renewed uncertainty.
Experts say two factors triggered the sudden yield spike: a failed primary market issuance that forced excess liquidity into the secondary market, and year-end cash pressures, which prompted investors to offload securities for liquidity.
According to Mallam Garba Kurfi, CEO of APT Securities Limited, yields shot up as investors scrambled for limited supply after the expected CBN issuance failed to materialise.
“When the CBN blocked that window, all the money meant for the new issue rushed into the secondary market,” he said.
Maxfund Africa CEO, Charles Fakrogha, added that December’s heavy cash demands pushed holders to sell even at discounts, amplifying the price collapse and yield surge.
Bond market: Broad price drop, steeper yields
Twelve benchmark FGN bonds recorded yield increases on December 9, with the most aggressive repricing concentrated along mid- and long-dated tenors. Many of these issues posted double-digit basis-point jumps, signalling investor reluctance to lock funds into longer maturities without higher returns. Six bonds closed flat, while only one saw a negligible positive move.
The rapid decline in price directly shaved off trillions from the market value of outstanding securities — the primary driver of the N2.53 trillion capitalisation erosion.
T-Bills: Short end holds, mid-tenor bills reprice
The Treasury-bills market showed mixed signals. Short-term OMO bills, those maturing between January and July 2026, all inched up in price, with yields dropping by a marginal 0.01 percentage point. The stability at the short end indicates that investors continue to see CBN-backed short paper as a safe liquidity asset.
However, several NT-bills farther along the curve posted meaningful yield increases as investors priced in steeper forward rates and shifted their portfolios defensively into shorter, more liquid assets.
Money market still tight
Money-market rates remained elevated. FMDQ data show the Open Repo (OPR) rate steady at 22.50%, while the overnight rate rose to 22.76% as of Tuesday, suggesting persistent funding pressure on banks and dealers.
Bond futures also mirrored the cash-market repricing. Three- and six-month futures settled lower, confirming that investors expect yields to stay higher in the near term.
Short-term Fixings reveal split funding conditions
NITTY rates used for short-term government securities climbed across most tenors, with one- to twelve-month instruments rising moderately to materially. Investors demanded higher returns to lend for these periods.
By contrast, NIBOR rates eased for one- to six-month maturities as CBN’s recent policy corridor adjustments made short-term interbank funding slightly cheaper. The notable exception was the overnight NIBOR, which ticked up to 22.9%.
Analysts: Yields may stabilise after liquidity normalises
Kurfi noted that the rush into long-dated securities reflects expectations that inflation and interest rates will continue to moderate, especially with recent improvements in external reserves. “If you lock in a 270-day instrument today, you can sleep for nine months,” he said.
Fakrogha argued that the spike partly reflects normal seasonal dynamics, advising investors to avoid panic. “Volatility is the heartbeat of financial markets,” he said. “A clearer trend should emerge by Thursday or Friday.”
Despite the turbulence, analysts agree the moves are not abnormal — merely the market adjusting supply, liquidity, and expectations ahead of the year’s end.
