Nigeria financial market last week, Naira appreciated, DMO offered N1.15trn bills

Last week, the Naira appreciated, strengthening to a mid-week high of N1,418.26/US$ in the NAFEM market before easing to N1,423.17/$ at the close of the week, representing a 0.54% week-on-week gain.

The trend, however, was not mirrored at the parallel market, where the currency weakened slightly, closing at N1,495.00/$ from N1,490.00/US$ in the prior week, reflecting a 0.33% week-on-week depreciation.

Central Bank of Nigeria’s gross foreign exchange reserves edged higher by 0.22% to $45.67bn, following an inflow of $100.46mn during the week.

Looking ahead, we anticipate that the CBN will emphasise exchange rate stability over rapid appreciation through 2026, supported by prudent policy execution and effective reserve management.

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Last week, the Debt Management Office (DMO) offered N1.15trn at the Nigerian Treasury Bills (NTB) primary market across the 91, 182, and 364-day tenors.

Demand was robust, with total subscriptions reaching N1.54trn, translating to a bid-to-cover ratio of 1.34x. Consequently, the DMO sold N1.14trn, largely in line with the amount on offer, while stop rates increased across all maturities.

The 91-day bill rose by 30bps to clear at 15.80% p.a., the 182-day bill increased by 55bps to 16.50% p.a., and the 364- day bill climbed by 96bps to settle at 18.47% p.a.

In addition, the CBN conducted an auction offering N600bn across 161-day and 210-day bills. Total subscriptions came in at N2.72trn, with allotments amounting to N2.71trn. Notably, the CBN sold the
entirety of bids worth N2.45trn at the longer-dated tenor. Overall, this resulted in a bid-to-cover ratio of 1.01x across all tenors.

In the secondary market, the average yield across the treasury bill space rose by 27bps w/w to 19.87% p.a., reflecting a broadly bearish tone. This was driven by selloffs in the NTB segment, where average yields
increased by 30bps w/w to 18.02% p.a., outweighing investors’ demand in the OMO segment, which saw average yields decline by 16bps w/w to 21.67% p.a.

Similarly, the FGN bond market traded on a bearish note, with average yields rising by 21bps w/w to 16.76% p.a. Yield increases were evident across the curve, with the short, medium, and long ends rising by
26bps, 18bps, and 13bps, respectively.

The Eurobond market also closed bearish, as average yields increased by 20bps to 7.24% p.a. System liquidity declined to N1.42trn from N3.36trn in the prior week, reflecting the impact of sizeable OMO and NTB sales totaling N3.85trn. Consequently, the Overnight Rate (OVN) edged higher to 22.79% from 22.75% in the previous week, while the Open Repo Rate (OPR) remained unchanged at 22.50%.
Looking ahead, with the DMO releasing the NTB auction calendar for Q1 2026, indicating planned issuance of N7.55trn, investors are likely to remain cautious in the secondary market, particularly amid tighter system liquidity.

The Nigerian equities market sustained its bullish momentum last week, recording gains in all trading sessions as the NGX All-Share Index (ASI) advanced by 3.71% w/w to close at 162,298.08 points.

Consequently, market capitalisation expanded by N3.84 trillion w/w to N103.78 trillion, bringing the year-to-date return to 4.30%. Over the week, gains in MTN Nigeria (+7.63% w/w), SEPLAT Energy (+10.00% w/w), and Guaranty Trust Holding (+7.48% w/w) were the primary drivers of market performance, more than offsetting losses in First HoldCo (-5.53% w/w), Access Holdings (-1.52% w/w), and Honeywell Flour Mills (-2.17% w/w).

Sectoral performance was broadly positive, with all indices closing in the green. The NGX Insurance Index led the gainers, rising 6.82% w/w, followed by the NGX Industrial Goods Index (+4.74%), NGX Oil & Gas Index (+4.70%), NGX Pension Index (+4.12%), NGX 30 Index (+3.38%), NGX Banking Index (+3.07%), and the NGX Consumer Goods Index (+2.76%).

Looking ahead, we expect positive sentiment to persist in the near term, supported by portfolio rebalancing activities, bargain hunting in fundamentally strong stocks, and continued positioning ahead of full-year earnings releases and dividend declarations.

Last week Brent crude prices ended higher, supported by increased geopolitical risk. Markets were on edge over potential political instability in Venezuela, following the US’ capture of President Maduro and announced moves to control Venezuelan oil revenues and potentially release tanked crude which had been trapped by sanctions.

This added uncertainty about future supply flows despite the already over-supplied market. At the same time, intensifying protests and unrest in Iran raised fears of possible supply disruptions from one of the world’s major
producers, helping lift oil risk premiums.

These developments helped push Brent to $62.99/bbl by the end of the week, marking a weekly gain of about 3.62% (the commodity is already tracking a year-to-date gain of 3.52%) despite an underlying global supply surplus that continues to weigh on prices.

This week, we expect traders to continue balancing abundant inventories and ongoing oversupply concerns with heightened geopolitical risk from Venezuela and Iran; this should determine the direction for prices through the week.