Nigeria’s fixed-income market recorded a significant expansion, with the Financial Markets Dealers Quotations (FMDQ) debt market reaching a total value of N99.30 trillion as of February 5, 2026. The increase was driven by a broad decline in yields on Treasury bills and Federal Government of Nigeria (FGN) bonds amid signs of improving liquidity in the financial system. Data from the FMDQ Securities Exchange show that both short- and mid-tenor instruments attracted strong demand, even as the Central Bank of Nigeria maintained elevated policy rates.
The swell in market size reflects core trends in Nigeria’s debt landscape. Liquidity inflows from maturing instruments helped to offset the impact of the central bank’s tight monetary stance. Improved system liquidity reduced reliance on aggressive short-term issuance, which in turn supported downward pressure on yields. Investors responded by rebalancing portfolios toward government securities that offered a balance of yield and manageable duration risk.
Trading activity across the yield curve confirmed investor interest at multiple points. The most pronounced yield declines occurred at the longer end of the Treasury bill curve and around the middle of the bond curve, indicating a selective but steady extension of duration. In contrast, ultra-long bond maturities beyond 2040 showed limited movement, suggesting that concerns over long-term inflation and fiscal risks have not abated.
Benchmark Treasury bills maturing between March and June 2026 delivered yields between 15.55 percent and 16.65 percent, while those due between July and September traded around 16.29 percent to 16.74 percent. Bills maturing later in 2026 settled near 16.05 percent to 16.20 percent, and the January 2027 paper closed about 16.05 percent. These figures reflect a downward trend relative to earlier periods of tighter liquidity and higher stop rates.
Bond yields across key tenors similarly contracted. Short-term FGN bonds due between 2027 and 2029 closed in the 16.04 percent to 16.11 percent range, mid-tenor bonds due 2031 to 2036 traded between approximately 16.25 percent and 16.88 percent, and longer bonds maturing from 2037 to 2053 settled between around 14.93 percent and 16.91 percent. The distribution of yields points to a flatter curve in the mid-section, consistent with strong demand for instruments that offer a balance of return and liquidity.
Money market indicators supported the broader trend of easing pressure. Interbank rates softened, with the overnight rate moderating to about 22.80 percent and the Open Repo Rate closing near 22.50 percent. This moderation was driven largely by liquidity inflows from maturing Central Bank of Nigeria Open Market Operations bills and other primary market instruments.
Despite sustained demand for government securities, policy settings remain restrictive. Elevated policy rates continue to anchor yields at high levels compared with historical averages. The yield compression observed during this period reflects demand-driven dynamics and improved liquidity rather than any substantive shift in monetary policy.
In summary, the expansion of Nigeria’s debt market to N99.30 trillion is underpinned by yield compression across Treasury bills and bonds, supported by an easing of systemic liquidity constraints. Investors show a marked preference for short- to mid-dated instruments that provide yield with relatively lower duration risk. While long-dated exposures remain constrained by residual inflation and fiscal concerns, the broader fixed income market is adjusting to improved funding conditions.
