OMO maturities push Nigeria’s system liquidity to N4.66tn

Nigeria’s financial system liquidity surged by 28.98 percent week-on-week to N4.66 trillion, up from N3.61 trillion, as maturities of Open Market Operations (OMO) instruments and Treasury bills injected substantial funds into the banking system, according to the latest Financial Markets Dealers Association (FMDA) Weekly Market report.

The sharp liquidity expansion came despite an estimated N3.75 trillion sterilisation through OMO and Nigerian Treasury Bills (NTB) auctions, highlighting the scale of funds flowing through the financial system during the review period.

The FMDA weekly report indicates that the liquidity position could remain elevated in the near term, with approximately N3.02 trillion expected to flow into the financial system this week.

OMO maturities are expected to account for about 97 percent of the projected inflows, with N2.94 trillion due to mature. Treasury bill maturities are expected to contribute N71.37 billion, while corporate bond coupons are projected at N236.25 million and commercial paper maturities at N3.42 billion.

CBN cuts treasury bill issuance to N500bn

Against the backdrop of improved liquidity, the Central Bank of Nigeria is scheduled to conduct a N500 billion Treasury bills auction this week, the lowest issuance size recorded in the third quarter of 2026.

The auction comprises N100 billion of 91-day bills, N100 billion of 182-day bills, and N300 billion of 364-day bills.

The previous NTB auction held on September 2 revealed a growing preference among investors for longer-dated instruments. The 364-day bill attracted a 6.48x bid-to-cover ratio, while the shorter 91-day and 182-day instruments were undersubscribed.

The stronger demand for longer maturities coincided with a decline in stop rates, with the 364-day rate falling to 16.84 percent from 17.15 percent previously. According to FMDA, the movement reflects improved liquidity and investors’ efforts to lock in relatively high yields ahead of expectations for gradual rate moderation.

Bond market activity accelerates

The liquidity improvement also coincided with stronger activity in Nigeria’s fixed-income secondary market.

Trading volumes in FGN bonds climbed to N1.65 trillion from N1.10 trillion, representing a 49.13 percent weekly increase, while NTB transactions rose by 20.59 percent to N1.42 trillion, from N1.17 trillion.

FMDA attributed the increase to improved investor participation and market liquidity.

FGN bond yields maintained a mixed pattern but tilted downward overall. The average bond yield fell by 9 basis points to 16.59 percent, supported by sustained demand around the middle and longer sections of the yield curve.

The 10-year FGN bond yield declined by 31 basis points to 16.90 percent, while the seven-year yield dropped by 37 basis points to 17.00 percent. The four-year instrument recorded the steepest decline at 52 basis points, settling at 16.50 percent.

Treasury bill yields were similarly mixed, with the average yield declining by 11 basis points to 18.57 percent. The six-month bill yield fell by 63 basis points to 18.34 percent, while the one-month yield declined by 54 basis points to 16.87 percent.

Oil prices rise as Middle East tensions persist

Beyond domestic markets, renewed geopolitical tensions in the Middle East pushed crude prices higher during the week.

Brent crude averaged $94.09 per barrel, representing a 6.59 percent weekly increase, adding another external variable to Nigeria’s macroeconomic outlook.

The report also showed that Nigeria’s external reserves stood at $54.08 billion, up 1.07 percent week-on-week, while the naira traded at N1,325.19/$ at the Nigerian Foreign Exchange Market (NFEM) and N1,403/$ in the parallel market.

Meanwhile, the Nigerian equities market extended its positive performance, with the All-Share Index rising 2.36 percent to 246,992.44 points and total market capitalisation increasing 2.40 percent to N159.56 trillion.