Nigeria’s fixed-income market strengthened on February 5, 2026, as Treasury bills and Federal Government bond yields declined across key maturities, lifting the total size of the FMDQ debt market to N99.30 trillion.
Data from the FMDQ Securities Exchange showed that improved system liquidity and reduced reliance on aggressive short-term issuance supported yield compression, pointing to softer borrowing costs despite the Central Bank of Nigeria’s (CBN) tight monetary policy stance.
Market activity reflected sustained investor demand for government securities, with participants increasingly positioning along the short-, mid- and long-tenors of the yield curve as liquidity inflows from maturing instruments outweighed the impact of monetary tightening.
What the data is saying
FMDQ data indicate broad-based yield decline across both Treasury bills and sovereign bonds, with the most pronounced declines seen at the longer end of the NTB curve and the belly of the bond curve.
The pattern suggests growing investor comfort in extending duration amid expectations of near-term stability in funding conditions.
- Treasury bills maturing between October and December 2026 recorded some of the sharpest yield declines during the session.
- FGN bonds with maturities between 2027 and 2035 closed lower, reflecting stronger demand in the short- to mid-tenor segment of the curve.
- Ultra-long-dated bonds beyond 2040 were largely unchanged, pointing to lingering caution around long-term inflation and fiscal risks.
- Overall market turnover showed a sustained appetite for government securities despite elevated policy rates.
Taken together, the data point to improving liquidity conditions and resilient demand, even as investors remain selective about long-dated exposures.
Insight on yields declines
Benchmark yields across Treasury bills and bonds closed lower across most tenors, reinforcing the bullish tone in the fixed income market.
Short- and mid-dated instruments attracted the strongest bids, consistent with investors’ preference for lower duration risk.
Benchmark Treasury Bills (NTBs):
- Mar–Jun 2026: 15.55% – 16.65%
- Jul–Sep 2026: 16.29% – 16.74%
- Oct–Dec 2026: 16.05% – 16.20%
- Jan 2027: 16.05%
Benchmark FGN Bonds:
- Short-term (2027–2029): about 16.04% – 16.11%
- Mid-term (2031–2036): about 16.25% – 16.88%
- Long-term (2037–2053): about 14.93% – 16.91%
The distribution of yields highlights a flatter curve in the belly, as investors continue to favour maturities that balance return and liquidity.
More insights from the market
Money market indicators supported the bullish fixed income sentiment during the session.
Easing interbank rates signalled improved liquidity conditions within the banking system.
- The overnight (O/N) rate moderated to 22.80%, while the Open Repo Rate (OPR) closed at 22.50%.
- The easing aligns with liquidity inflows from maturing Central Bank of Nigeria Open Market Operations bills and other primary market instruments.
- FGN bond futures prices remained firm across the 2-year and 10-year contracts, signalling expectations of near-term yield stability.
- Market participants continued to rebalance portfolios toward government securities amid limited alternative yield opportunities.
Government securities remain central to asset allocation strategies for banks, pension funds and asset managers.
What you should know
Current yield levels mark a clear moderation from the elevated rates recorded in late 2025 and January 2026, when liquidity conditions were tighter and auction stop rates more volatile.
The latest market movements underline demand-driven yield compression rather than a shift in the Central Bank of Nigeria’s monetary policy stance.
- NTB and bond yield compression reflect stronger investor demand supported by easing liquidity.
- Policy rates remain elevated, anchoring yields at relatively high levels by historical standards.
- Investors are increasingly favouring short- to mid-dated instruments for a balance between yield and risk.
- Caution persists at the long end of the curve due to inflation and fiscal sustainability concerns.
Overall, the data suggest a fixed income market adjusting to improved liquidity conditions after the Central Bank of Nigeria (CBN) injected over N1.7 trillion into the financial system through a series of repayments in early February.
