Yields on Nigerian Treasury Bills (NTBs) and Open Market Operation (OMO) bills dropped across most maturities on October 20, 2025, as reported by the FMDQ Securities Exchange, signaling robust investor demand for low-risk government securities despite constrained market liquidity. Federal Government of Nigeria (FGN) bonds, however, displayed mixed performance, with yields remaining largely stable.
Treasury Bills See Yield Compression
The average yields on NTBs fell by three basis points across all maturities, driven by growing investor interest in short-term, risk-free instruments. The 6-November 2025 bill closed at 16.60%, down from 16.63%, while the 4-December 2025 bill eased to 17.54% from 17.57%. Longer maturities followed suit, with the 5-February 2026 bill declining to 16.88% and the 9-July 2026 bill dropping to 17.71%. The 8-October 2026 bill, the longest tenor, saw its yield fall to 17.82% from 17.85%.
Analysts attribute this yield moderation to expectations of continued monetary policy easing by the Central Bank of Nigeria (CBN), supported by slowing inflation. David Adonri, a market analyst, noted, “The slight decline in yields reflects improving economic fundamentals, with the market anticipating a more stable outlook.”
OMO Bills Follow Suit
The OMO bill segment mirrored the NTB trend, with yields softening across most maturities. The 4-November 2025 OMO bill closed at 20.63%, down 0.03 percentage points, while the 2-December 2025 bill fell to 23.53% from 23.56%. The 6-January 2026 paper dropped to 21.79%, and longer-dated bills, such as those maturing on 14-April 2026 and 7-July 2026, closed at 20.55% and 19.28%, respectively. Market participants cited selective buying by banks and asset managers, driven by limited liquidity and inflows from maturing instruments, as a key factor in the yield decline.
Mixed Performance in FGN Bonds
FGN bonds exhibited varied performance, with yields holding steady across most benchmark maturities. The 17-March 2027 bond remained unchanged at 16.02%, while the 20-March 2027 bond dipped slightly by seven basis points to 15.89%. The 15-May 2033 bond fell 13 basis points to 15.98%. Gains were observed in the mid-curve segment, with the 23-February 2028 and 20-March 2028 bonds rising to 16.20% and 16.19%, respectively. Longer-tenor bonds, such as those maturing in 2038 and 2050, showed stability at 15.65% and 15.46%.
Traders noted cautious sentiment in the bond market, with investors weighing coupon payment reinvestments against expectations of new issuances from the Debt Management Office (DMO) at the upcoming October 22 auction. A Lagos-based dealer commented, “The market is stabilizing after recent volatility, but investors are awaiting signals from the next auction.”
Money Market Dynamics
In the money market, rates saw slight declines despite ongoing liquidity constraints. The Open Repo (OPR) rate dropped by 0.04 percentage points to 24.50%, and the Overnight (O/N) rate fell by 0.21 percentage points to 24.86%. These reductions were supported by marginal inflows from bond coupon payments, though system liquidity remained tight, estimated at below N100 billion.
Market Outlook
The fixed-income market’s cautious tone reflects a balance between investor demand for secure assets and liquidity challenges. With the CBN’s upcoming auctions and evolving economic indicators, analysts anticipate further yield moderation in the near term, provided monetary policy remains accommodative and liquidity conditions improve.
