The Nigerian fixed-income market experienced a challenging week, characterised by persistent bearish sentiment and cautious investor activity across both primary and secondary market segments. Market participants continued to navigate a complex environment defined by domestic liquidity fluctuations and external global pressures.
Reflecting on the current market stance, analysts at Meristem Securities noted that “investors remain cautious as they recalibrate portfolios in response to persistent inflationary concerns and shifts in yield expectations, which continue to drive selective sell-offs in both the bond and T-bill segments”.
The Central Bank of Nigeria conducted an Open Market Operation auction during the week, offering a total of N600 bn across 8-day, 99-day, and 113-day maturities. The auction saw moderate demand, with total subscriptions rising by 7.75 per cent from the previous session to N767 bn.
However, the total allotment was significantly lower at N81bn, resulting in a bid-to-cover ratio of 0.14x and a subscription-to-offer ratio of 1.28x. Stop rates cleared at 19.35 per cent and 19.69 per cent for the 99-day and 113-day maturities, respectively, while the 8-day instrument recorded no sales.
In the Treasury Bills primary market, the CBN offered N850 bn, compared to the N1.05 tn offered in the previous auction. Despite the lower offering, investor demand remained concentrated at the long end of the curve. The 364-day bill attracted N2.57 tn in subscriptions, accounting for 92.44 per cent of total bids.
Total allotment for the auction stood at N933.92bn, with the subscription-to-offer ratio rising to 3.27x from 2.23x. While stop rates for the 91-day and 182-day bills held steady at 15.95 per cent and 16.65 per cent, the 364-day rate eased slightly by one basis point to 16.72 per cent.
Secondary market activity remained largely negative, as investors offloaded older holdings to position themselves in the recently issued, higher-yielding securities. This rotation exerted upward pressure on yields, particularly on instruments such as the 17-Dec-26 and 4-Feb-27 bills, which saw sharp yield increases. Despite pockets of buying interest in the mid-curve, the average T-Bill yield rose by 20 basis points to 17.66 per cent.
The FGN bond market similarly extended its bearish trend, with the average yield rising one basis point to 15.76 per cent. Sell-off pressure was most pronounced at the short and long ends of the curve, notably impacting the APR-29 and JUN-53 bonds. Conversely, some buying interest emerged in the mid-curve, providing a partial buffer against broader market losses.
On the international front, Nigeria’s Eurobond market closed in the red, with the average yield increasing by eight basis points to 7.25 per cent. Market analysts attributed this trend to higher-than-expected US inflation data and a strengthening US dollar, which stimulated “risk-off” sentiments globally. This environment triggered widespread sell-offs across the Eurobond curve, with significant yield increases noted on the SEP-28 and NOV-27 papers.
