Maturing Securities: N3tn Liquidity Boost Could Push Yields Higher This Week

Nume Ekeghe

With more than N3 trillion expected to enter the financial system this week from maturing securities, analysts predict that fixed‑income yields will ease further, even as the naira remains under pressure despite improving foreign‑exchange liquidity.

The Financial Markets Dealers Association (FMDA) reported that roughly N3.03 trillion will flow into the banking system this week, largely driven by Open Market Operations (OMO) maturities worth N2.25 trillion.

The report noted that system liquidity was still high at N6.29 trillion last week, buoyed by large inflows from maturing securities.

Analysts say the substantial liquidity injection should keep demand for fixed‑income instruments strong and could push yields lower in the short term.

“System liquidity remained elevated at N6.29 trillion, supported by sizeable inflows from maturing securities. Looking ahead, an estimated N3.03 trillion is expected to flow into the system this week, largely driven by OMO maturities, which account for about 74 per cent of projected inflows,” a market watcher said.

Reflecting this trend, the average FGN bond yield fell slightly to 16.20 per cent from 16.25 per cent the week before, as demand improved across most maturities.

Treasury bill yields also averaged lower at 17.45 per cent, down from 17.51 per cent, with the 12‑month tenor recording the sharpest decline of 41 basis points to 18.61 per cent.

FMDA added: “FGN bond yields moderated slightly across most maturities, reflecting improved demand and relatively stable market conditions. Treasury bill yields showed mixed movements, with slight increases at the mid‑tenors, while the average yield declined marginally to 17.45 per cent. Across global markets, bond yields edged higher, driven by persistent inflation concerns and cautious monetary policy expectations. Nigeria’s long‑term benchmark yield remained broadly stable, despite upward movements in major developed and African markets.”