Maturing Securities: N3tn Liquidity Boost May Pressure Yields Further This Week 

Nume Ekeghe

With over N3 trillion expected to hit the financial system this week from maturing securities, analysts have projected a further moderation in fixed income yields even as pressure persists on the naira despite improving foreign exchange liquidity conditions.

The Financial Markets Dealers Association (FMDA), in its latest market report, estimated that about N3.03 trillion would flow into the banking system this week, largely driven by Open Market Operations (OMO) maturities valued at N2.25 trillion.  

The report stated that system liquidity had remained significantly elevated at N6.29 trillion in the previous week, supported by large inflows from maturing securities.  

Analysts said the massive liquidity injection is expected to sustain strong demand for fixed income instruments and potentially drive yields lower in the near 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,” said a market watcher.

Reflecting this trend, average FGN bond yield eased marginally to 16.20 per cent from 16.25 per cent in the prior week, amid improved demand across most maturities.  

Treasury bill yields also closed lower on average at 17.45 per cent from 17.51 per cent, with the 12-month tenor recording the sharpest decline of 41 basis points to 18.61 per cent.  

FMDA stated: “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.”