Nigeria’s fixed-income market is expected to receive about N11 trillion in liquidity inflows in October, a development Cordros Capital says could sustain reinvestment demand and place further downward pressure on yields.
The projection is contained in Cordros Capital’s September 2026 Fixed Income Monthly Review, which puts expected inflows at N9.05 trillion from maturing Open Market Operations (OMO) securities, N1.30 trillion from Nigerian Treasury Bills (NTBs) and N650.67 billion in Federal Government of Nigeria (FGN) bond coupon payments.
OMO maturities will account for about 82% of the projected inflows, making them the major source of liquidity returning to the financial system during the month.
Cordros expects the inflows to strengthen reinvestment demand for Treasury bills and bonds, particularly at the short end of the market. However, the firm cautioned that fresh OMO and NTB issuances could absorb a substantial portion of the liquidity and moderate its impact on yields.
The September market performance offers an indication of what could happen in October. Cordros said N13.14 trillion in OMO maturities supported reinvestment activity in September, while average banking-system liquidity rose to a net-long position of N4.30 trillion from N4.12 trillion in August.
The increased liquidity coincided with broad declines in money-market and fixed-income yields. The overnight rate fell by 174 basis points to 20.4%, while average Treasury bill yields declined by 124 basis points to 18.0%.
Average OMO secondary-market yields also dropped by 150 basis points to 18.8%, while the average OMO stop rate declined by 205 basis points to 17.80% from 19.85% in August.
FGN bond yields fell by 108 basis points to 15.9%, although demand remained stronger for Treasury bills than for longer-dated government bonds.
The fixed-income rally also followed the Monetary Policy Committee’s decision on September 22 to cut the Monetary Policy Rate by 350 basis points, from 26.5% to 23%.
Cordros expects liquidity conditions and foreign investor participation to remain supportive of Nigerian fixed-income assets in October. It noted, however, that inflation, government borrowing and fresh securities issuance could limit the extent of any further decline in yields.
The Debt Management Office’s September auction also reflected strong demand for Treasury bills, receiving N10.22 trillion in bids against N2.05 trillion on offer before allotting N2.42 trillion. Demand at the long end was particularly strong, with the bid-to-offer ratio reaching 10.2 times at the final auction.
With about N11 trillion expected to return to the financial system in October, market performance will largely depend on the balance between maturing securities and fresh issuance by the Central Bank of Nigeria and the government.
A substantial portion of the liquidity could therefore be recycled into new government securities rather than remaining in the broader financial system, leaving yields dependent on the scale of investor demand, inflation expectations and government borrowing needs.
