Lagos, Nigeria – Borrowing costs eased across Nigeria’s fixed-income market on Thursday, February 19, as yields on Treasury Bills, OMO bills, and FGN bonds declined amid robust investor demand, signalling cheaper financing for the Federal Government.
Okay News reports that market data obtained from secondary market traders showed broad-based yield compression across key tenors. Treasury Bills led the decline, with the average yield falling 14 basis points to 17.3 percent, marking one of the strongest weekly rallies recorded in recent sessions. Yields on the one month paper declined by 12 basis points, while the three month and 12 month tenors also eased. Demand was particularly strong for the 77 day, 105 day and 273 day maturities, which saw yield drops of 51, 50 and 117 basis points respectively.
The easing extended to other fixed-income segments. Average yields on OMO bills contracted by 6 basis points to 20.8 percent, suggesting continued demand for high-yielding central bank instruments. In the FGN bond market, average yields declined by 3 basis points to 15.9 percent, supported by buying interest at the short and mid segments of the curve. The APR 2032 bond recorded a 47 basis point compression, reflecting strong appetite for medium-term sovereign debt. By Thursday’s close, average FGN bond yields eased further to 16.03 percent.
In contrast, Nigeria’s Eurobond market moved in the opposite direction. Average yields on dollar-denominated sovereign debt edged up by 1 basis point to 6.90 percent, indicating slightly weaker offshore sentiment, possibly influenced by global risk conditions. Despite the bond rally, short-term funding rates ticked higher on marginal liquidity tightening. The overnight lending rate rose 4 basis points to 22.9 percent, while the Open Repo rate held steady at 22.50 percent.
The broad rally across instruments signals renewed investor confidence in naira-denominated assets and has pushed domestic borrowing costs lower. The trend also comes amid expectations that monetary conditions could resume easing as inflation moderates, potentially paving the way for a policy rate adjustment by the Central Bank of Nigeria. At the most recent NTB auction, the CBN raised N1.91 trillion at lower rates, with stop rates for the 364 day bill coming in significantly lower than previous levels. Strong investor demand provided the apex bank room to reduce its offer rates.
