Fixed income market rallies, yields on Naira assets swing

The secondary fixed income market sustained its bullish momentum in the just-concluded week, reflecting heightened demand for the Naira assets and persistent yield swings.

In the Treasury bill secondary market, trading activities closed on a strong positive note as average yield declined by 60bps to 17.62% from 16.22% last week, Meristem Securities Limited told investors in a note.

Fixed income market analysts said buying interests was widespread across most instrument with strong demand observed in long-dated bills, including the OCT-26 (-149bps), NOV-26 (-165bps), and DEC-26 (+171bps) instruments.

In the primary market, the CBN held its first Treasury bills (T-bills) auction in the month of February this week, offering a total of NGN1.15 trillion across tenors.

Investor’s demand was strong with total subscription at NGN4.59trn, up 33.41% from the previous auctio,n resulting in a subscription-to-offer ratio of 3.99x.

The elevated subscription levels were primarily driven by the 364-day bill, which accounted for 84.90% of total subscriptions. Total allotment declined by 10.17% from the previous auction to N952.61bn, with a bid-to-cover ratio at 0.82x (vs. 0.92x previously).

Stop rates on the 91-day and 182-day instruments remained unchanged at 15.84% and 16.65% respectively, while the 364-day stop rate declined by 137bps to 16.99%. 

Analysts reported that the Nigerian Treasury bills with FEB-2026 expiration (+0.96bps) was the only decliners in this week’s trading session.
“We opine that the lower rate on the long end was due to the higher volume of bids at the lower band of the bidding rate range, which enabled a reduction in rate. Furthermore, the lower rate is expected to ease borrowing costs for the government”, analysts said.

Similarly, the secondary bond market traded on a bullish note this week, with average yields down 31bps to 16.17% from 16.48% last week.
Buying sentiment concentrated in the short to mid end of the curve, particularly in the MAR-2026 (-88bps), APR-2031 (-125bps) and MAY-2033 (-107bps) bonds. Meanwhile, activity in the longer end of the curve was quiet as all instruments closed flat.

The Eurobond market closed flat in this week’s trading session, with average yield holding steady at 7.07%. Investor sentiment was mixed across the curve as bonds like the Nov-27 (-6pbs), Feb-32 (-3bps), and Sep-33 (-2bps) bonds closed on a bullish note.

While sell-offs were observed in some bonds, including the 28-Sep-28 (+2bps), 23-Feb-30 (+3bps), and 23-Feb-38 (+3bps). This week’s performance suggests that investors remain cautious amid geopolitical tension.