Fixed Income Market Heats Up by Selloffs, Naira Assets Yields Rise
The Nigerian fixed interest securities market heated up with selloffs as investors readjusted their portfolios in reaction to a surprise increase in the treasury bills spot rate.
The selloffs nudged average yields on the naira assets higher across tenors, and it happened across the Nigerian Treasury, OMO bills and bonds.
The market witnessed the Central Bank of Nigeria (CBN) pushing the spot rate on Treasury bills papers upward, and series of OMO actions were conducted to mop up excess liquidity in the financial system.
The authority lifted the one year treasury bills rate to about 18% this week, and this juicy carrot pricing is quite close to OMO bills, collapsing the usual wide gap, as CBN often prices the latter to attract foreign portfolio investors home.
With disinflation, the market had anticipated the spot rate on short-term investment securities would be lower, but the treasury rate was adjusted twice in two weeks.
On Wednesday, the CBN floated its ad hoc treasury sales totalling NGN750.00bn across the three maturities. Investor appetite strengthened significantly, with total bids rising 118.03% to N1.69 trillion from N774.84 billion at the previous auction.
The CBN allotted NGN788.20 billion, a significant increase from NGN709.62 billion sold at the prior auction. Stop rates were stable at 15.30% and 15.50% on the 91-day and 182-day bills, respectively, while the 364-day stop rate was raised by 45bps to 17.95%.
Similarly, at the OMO auction, demand was strong, with total subscriptions rising to NGN2.67 trillion against the NGN600.00 billion on offer, and the CBN ultimately allotting NGN1.32 trillion.
This came after an earlier OMO auction in the week where no sales were made due to the high bid ranges submitted by investors, according to Meristem Securities Limited.
Stop rate cleared at 19.39% for the 180-day tenor and 19.49% for the 215-day tenor.
In the secondary market, T-bills extended their bearish trend, with average yields rising by 74 bps to 17.72% from 16.98%, driven by broad-based sell-offs across the curve.
Meristem Securities Limited reported that significant upward movements were recorded on the JAN26 (+218bps), OCT-26 (+169bps), and MAR-26 (+125bps) maturities, as investors react to the higher yields at the primary auction.
Conversely, pockets of buying interest emerged, resulting in notable yield compressions on MAR-26 (–32bps), SEPT-26 (–33bps), and DEC-26 (–54bps) instruments
Similarly, the bond market closed bearish, with average yields rising by 99bps to 16.63% from 15.64%. Sell pressure dominated across the curve, led by notable increases in AUG-2030 (+182bps), APR-2029 (+130bps), and JUN-2038 (+101bps).
However, mild buying interest persisted at the short end, resulting in slight yield compressions in JAN2026 (–4bps) and MAR-2026 (–15bps), fixed income market analysts at Meristem Securities Limited said in a note. MTN Nigeria Hits 52-Week High as Investors Double Down Bets
