FMDA projects Nigeria’s liquidity inflows to fall 14.8% to N13.25 trillion in October

The Financial Markets Dealers Association (FMDA) has projected total liquidity inflows into Nigeria’s financial system at N13.250 trillion in October 2026, representing a 14.82% decline from the N15.556 trillion estimated for September.

The projection, contained in FMDA’s September monthly research report, shows that the decline is driven mainly by lower Open Market Operations (OMO) maturities, which are expected to fall 21.97% to N9.051 trillion from N11.600 trillion in September.

Despite the decline, OMO maturities remain the largest source of projected liquidity, accounting for about 68.3% of October inflows.

OMO maturities drive liquidity decline:

OMO maturities, Treasury bill maturities and estimated Federation Account Allocation Committee (FAAC) distributions are projected to contribute approximately N12.774 trillion, equivalent to 96.4% of total October liquidity inflows.

• This leaves the system heavily dependent on OMO repayments and government-related flows during the month.
• Other projected inflows are considerably smaller, although FGN and corporate bond coupon payments are expected to increase.
• Treasury bill maturities are projected to decline 2.55% to N1.223 trillion from N1.255 trillion, while estimated FAAC inflows rise 6.84% to N2.5 trillion from N2.34 trillion in September.
• FGN bond coupons are projected to jump 52.02% to N434.163 billion from N285.601 billion.
• Corporate bond coupon payments are expected to increase 41.75% to N23.317 billion from N16.449 billion.
• Commercial paper maturities are projected to fall 61.55% to N18.841 billion from N49.003 billion, while no corporate or FGN bond maturities are indicated for October.

The projected N2.306 trillion reduction in overall inflows therefore largely reflects the smaller volume of OMO securities scheduled to mature during October.

Heavy issuance meets weaker demand:

The October projection follows a September characterised by heavy CBN liquidity management and increased fixed-income issuance. OMO issuance surged 45.61% to N17.510 trillion from N12.025 trillion in August, making it the largest component of new issuance during the month.

• Total amounts raised through OMO bills, Nigerian Treasury Bills and FGN bonds increased 37.4% to approximately N20.677 trillion from N15.049 trillion in August.
• NTB issuance increased 8.97% to N2.418 trillion, while FGN bond issuance declined 6.96% to N749 billion.
• According to FMDA, OMO bid-to-cover ratio fell to 3.69 times from 4.62 times, despite the sharp increase in issuance.
• Also, NTB bid-to-cover declined to 5.11 times from 5.86 times, while the FGN bond ratio fell to 1.49 times from 1.57 times.
• Combined secondary-market turnover increased 16.85% to N41.002 trillion, driven partly by a 64.20% surge in FGN bond turnover to N6.962 trillion.

Average yields declined across all three segments, with NTB yields falling 147 basis points to 17.74%, OMO yields dropping 132 basis points to 18.49% and FGN bond yields declining 110 basis points to 15.90%.

October liquidity faces CBN sterilisation test:

System liquidity increased 1.14% to N4.703 trillion in September from N4.65 trillion in August, according to the FMDA report. Liquidity peaked at about N8.84 trillion following FAAC inflows before moderating as CRR debits, OMO sterilisation and primary-market issuances removed cash from the system.

• FMDA said declining yields present both opportunities and challenges for financial institutions, with new investments earning lower returns while holders of existing securities could benefit from mark-to-market gains.

The association cautioned that CRR debits, aggressive OMO sterilisation and lower projected October inflows could keep system liquidity volatile.

• FMDA recommended positioning for moderating yields and locking in duration where attractive, particularly at the long end of the FGN bond curve, while maintaining prudent liquidity buffers.
• The naira appreciated 1.39% in the NFEM window during September, while FMDA cited external reserves of $54.92 billion and a Q2 current-account surplus of $7.54 billion.
• The MPC’s September 21–22 meeting ended with a 350-basis-point reduction in the benchmark interest rate, followed by declines in NTB stop rates across tenors.

With N9.051 trillion in OMO maturities accounting for more than two-thirds of expected October inflows, liquidity conditions will remain sensitive to the scale of fresh OMO sales and other sterilisation measures deployed by the CBN during the month.