Nigeria’s fixed income market shifted towards cautious confidence on February 5, 2026 as liquidity improved.
As a result, investors increased exposure to Treasury bills and FGN bonds, pushing yields lower.
Consequently, the FMDQ debt market expanded to ₦99.30 trillion by the session’s close.
Liquidity Drives The Shift
Notably, liquidity flows—not policy shifts—drove the market move, despite the CBN’s tight stance.
As repayments matured, fresh cash entered the system and reduced short-term issuance pressure.
Investors Turn Selective
Meanwhile, investors adopted a more selective strategy across the yield curve.
In particular, demand strengthened at the short and mid segments, where risk remained more manageable.
Accordingly, investors favoured flexibility as policy rates stayed elevated.
FMDQ data confirmed broad yield declines across Treasury bills and sovereign bonds.
Specifically, Treasury bills maturing between October and December 2026 posted the sharpest declines.
At the same time, FGN bonds maturing between 2027 and 2035 closed lower on firm demand.
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However, bonds beyond 2040 held steady as investors weighed inflation and fiscal risks.
Rates Ease, Caution Remains
As yields compressed, the curve flattened around the belly of the market.
Therefore, investors focused on liquid tenors with lower duration exposure.
Money market indicators further reinforced the improving liquidity trend.
Accordingly, the overnight rate eased to 22.80%, while the Open Repo Rate closed at 22.50%.
These shifts followed inflows from maturing CBN OMO bills and other repayments.
In parallel, FGN bond futures stayed firm, signalling expectations of near-term yield stability.
Ultimately, improved liquidity is reshaping investor behaviour towards discipline rather than duration risk.
