Nigeria’s fixed-income market delivered some of the highest sovereign yields in recent years in the first quarter of 2026 before the Central Bank of Nigeria’s (CBN) easing cycle began pushing returns lower across the curve.
Data from the CBN and DMO showed that January marked the peak of the yield cycle, February triggered a sharp repricing, while March reflected stabilisation at lower levels. The rally was driven by heavy government borrowing to finance a record N23.85 trillion fiscal deficit and tight liquidity conditions aimed at controlling inflation.
The 364-day Treasury bill delivered the quarter’s highest return at 18.47% in the January 7 auction — the top risk-free naira yield recorded in the period. The 91-day bill remained stable within 15.80%–15.95%, while the 182-day bill peaked at 16.65% before easing to 16.42% by late March.
On the bond side, the 18.50% FGN FEB 2031 recorded a peak yield of 17.62% in January, while the 19.00% FGN FEB 2034 saw the steepest decline, falling 200 basis points between January and February.
Total FGN bond subscriptions hit N5.88 trillion against a N2.45 trillion offer, reflecting strong demand despite falling yields.
The January 7 auction set the tone, with the 364-day bill attracting massive demand of N3.345 trillion against an N800 billion offer. By February, yields began dropping after the MPC cut the MPR by 50 basis points to 26.50%.
By March, short-end rates stabilised, with the 91-day bill holding at 15.95% across multiple auctions and the 364-day easing to 16.43%.
Despite lower yields, demand stayed strong, with the March 25 one-year bill attracting N2.726 trillion against a N200 billion offer.
Overall, investors who entered in January captured the cycle’s highest returns, while subsequent auctions reflected a clear downward repricing trend.
Analysts say Q1 2026 likely represents the peak of Nigeria’s current fixed-income yield cycle, even though returns remain attractive by historical standards.
