Costs of borrowing eased across Nigeria’s fixed-income market on Thursday, February 19, 2026, as yields on Treasury Bills, OMO bills, and FGN bonds declined amid robust investor demand.
Market data obtained from different secondary market traders showed broad-based yield compression across key tenors, signaling cheaper financing costs for the Federal Government.
The rally spanned short, mid and long-term instruments, reflecting renewed appetite for naira-denominated assets despite relatively tight liquidity conditions.
The development points to sustained participation by domestic institutional investors, who continue to dominate the market, driving the yield trend through strong demand.
What the data is saying
Treasury Bills led the decline in yields as buying pressure intensified across most maturities. The average NTB yield fell 14 basis points to 17.3%, marking one of the strongest weekly rallies recorded in recent sessions.
Across standard Treasury Bill tenors:
- Yields on the 1-month paper declined by 12 basis points.
- The 3-month tenor fell by 8 basis points, while the 12-month paper eased by 4 basis points.
- The 6-month tenor was the only exception, rising by 14 basis points.
- Demand was particularly strong for the 77-day, 105-day and 273-day maturities, which saw yield drops of 51 basis points, 50 basis points and 117 basis points, respectively.
Overall, the NTB average yield closed at 17.33%, underlining a broad reduction in short-term financing costs and signalling investors’ continued comfort in deploying liquidity into risk-free government instruments.
The bullish trend was not limited to the secondary market, as lower stop rates were also observed at the Central Bank of Nigeria’s NTB auction earlier in the week, reflecting improved sentiment among local institutional investors.
More insights
The easing in borrowing costs extended to other segments of the fixed-income market, reinforcing the broader rally.
Average yields on OMO bills contracted by 6 basis points to 20.8%, suggesting continued demand for high-yielding central bank instruments even as liquidity management operations remain active.
In the FGN bond market
- Average yields declined by 3 basis points to 15.9%, supported by buying interest at the short and mid segments of the curve.
- The APR-2029 bond recorded a 5 basis point drop in yield.
- The APR-2032 bond saw a sharper 47 basis point compression, reflecting strong appetite for medium-term sovereign debt.
- By Thursday’s close, average FGN bond yields eased further to 16.03%, highlighting sustained local investor participation.
- While financing costs trended downward across most maturities, longer-duration assets remained relatively flat.
In contrast, Nigeria’s Eurobond market moved in the opposite direction. Average yields on dollar-denominated sovereign debt edged up by 1 basis point to 6.90%, indicating slightly weaker offshore sentiment, possibly influenced by global risk conditions and external rate expectations.
What you should know
The broad rally across NTBs, OMO bills and FGN bonds signals renewed investor confidence in Naira-denominated assets and has pushed domestic borrowing costs lower. The trend also comes amid expectations that monetary conditions could resume easing as inflation moderates, potentially paving the way for a policy rate adjustment by the CBN.
- At the most recent NTB auction, the CBN raised N1.91 trillion at lower rates.
- Stop rates, particularly for the 364-day bill, came in significantly lower than previous levels.
- Strong investor demand provided the apex bank room to reduce its offer rates.
- Despite the bond rally, short-term funding rates ticked higher on marginal liquidity tightening.
- The overnight lending rate rose 4 basis points to 22.9%, while the overnight Nigerian Interbank Offered Rate climbed 7 basis points to 22.84%.
- The 3-month NIBOR increased by 8 basis points, even as the 6-month rate fell by 3 basis points and the 1-month tenor remained unchanged.
- The Open Repo rate held steady at 22.50%.
Overall, domestic players drove significant yield compression across multiple tenors, creating a supportive environment for government financing as borrowing costs continue to trend downward on the back of strong market demand.
