Fixed Income Market Yields Steady after OMO Bills, Bond Auctions

Fixed Income Market Yields Steady after OMO Bills, Bond Auctions

Fixed income market yields closed steady on Friday as the average yield on open market operations (OMO) bills ended flattish after the Central Bank of Nigeria (CBN) raised N25 billion from the primary market auction conducted on Thursday amidst heavy demand.

Both Treasury and OMO bills see their respective yields unchanged at weekend with a moderate jump in the Federal Government bonds secondary market – Debt Management Office (DMO) had raised N228 billion from bond auction yesterday.

Due to unimpressive performance in the fixed income market, investors have turned to primary market auctions to sink their funds into better paying financial instruments.

With the slowdown in headline inflation rate and healthy liquidity in the financial system, upward yield repricing has been scarce while funds seek safe haven in the local market amidst a lack of alternatives.

Meanwhile, liquidity position in the financial system strained on Friday as short terms rates jumped up strongly, data tracked from the FDMQ Exchange shows.

The Overnight (O/N) rate increased by 6.44 per cent to close at 20.00 per cent as against the last close of 13.56 per cent, and the Open Buy Back (OBB) rate increased by 6.00 per cent to close at 19.00 per cent compared to 13.00 per cent on the previous day.

In the Nigerian Treasury Bills secondary market, trading activities closed on a flat note with the average yield across the curve remaining unchanged at 5.11 per cent.

Meanwhile, average yields across short-term, medium-term, and long-term maturities closed flat at 3.96 per cent, 4.80 per cent, and 5.82 per cent, respectively, according to various analysts’ reports assessed by MarketForces Africa.

In the OMO bills market, the average yield across the curve closed flat at 5.48 per cent, according to a market note from FSDH Capital. Analysts hinted that average yields across short-term, medium-term, and long-term maturities remained unchanged at 5.36 per cent, 5.55 per cent, and 6.04 per cent, respectively.

The CBN held an OMO auction yesterday where the apex bank sold bills worth ₦25.00 billion across the 124-day (₦5.00 billion), 194-day (₦5.00 billion), and 341-day (₦15.00 billion) tenor.

Auction report shows that stop rates on these new OMO Bills issuance remained unchanged at 7.00 per cent, 8.50 per cent, and 10.10 per cent, respectively. According to FSDH Capital note, the OMO auction was oversubscribed, indicating a subscription level of 380 per cent at a total level of ₦95.06 billion.

Analysts however spotted that demand for the open market operations bills was skewed towards long tenor maturity bills with bid-to-cover ratios settling at 1.80x (124-day), 3.74x (194-day), and 4.49x (341-day).

Elsewhere, trading activities in FGN bonds secondary market closed on a calm note as the average bond yield across the curve cleared higher by 1 basis point to close at 8.44 per cent from 8.43 per cent on the previous day.

Average yields across medium tenor and long tenor of the curve increased by 5 and 2 basis points, respectively. However, the average yield across the short tenor of the curve remained unchanged.

The 22-JAN-2026 maturity bond was the best performer with a decrease in the yield of 15 basis points, FSDH Capital said while the 26-APR-2029 and 22-MAY-2029 maturity bonds were the worst performers with an increase in yield of 15 basis points each.

Going into next week, analysts said the secondary bond market is likely to remain subdued in the short term. #Fixed Income Market Yields Steady after OMO Bills, Bond Auctions

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