Nigeria’s fixed-income market strengthened on February 5, 2026, as Treasury bills and Federal Government bond yields declined across key maturities. This positive movement has propelled the total size of the FMDQ debt market to N99.30 trillion, signaling a significant milestone for the nation's financial landscape.

Data sourced from the FMDQ Securities Exchange indicates that the increased system liquidity and a decreased reliance on aggressive short-term issuance have contributed to yield compression. This suggests a softening of borrowing costs, despite the Central Bank of Nigeria’s (CBN) continued adherence to a tight monetary policy stance.

Market Activity

Market activity on February 5, 2026, reflected sustained investor demand for government securities. Participants are strategically positioning themselves along the short-, mid- and long-tenors of the yield curve, capitalizing on liquidity inflows from maturing instruments that outweigh the impact of monetary tightening. This suggests that investors are increasingly comfortable with extending duration, anticipating near-term stability in funding conditions.

FMDQ data reveals a broad-based yield decline across both Treasury bills and sovereign bonds. The most pronounced declines were observed at the longer end of the NTB curve and the belly of the bond curve, implying growing investor confidence in extending duration, supported by expectations of near-term stability in funding conditions.

The prevailing market conditions indicate improving liquidity and resilient demand, although investors remain selective about long-dated exposures. Benchmark yields across Treasury bills and bonds closed lower across most tenors, reinforcing the bullish tone in the fixed income market. Short- and mid-dated instruments attracted the strongest bids, aligning with investors’ preference for lower duration risk. The distribution of yields highlights a flatter curve in the belly, as investors continue to favor maturities that balance return and liquidity.

Money Market Indicators

Money market indicators supported the bullish fixed income sentiment during the session. Easing interbank rates signaled improved liquidity conditions within the banking system, further contributing to the overall positive market sentiment. Government securities remain central to asset allocation strategies for banks, pension funds, and asset managers.

Yield Data

Current yield levels mark a clear moderation from the elevated rates recorded in late 2025 and January 2026, when liquidity conditions were tighter and auction stop rates more volatile. The latest market movements underline demand-driven yield compression rather than a shift in the Central Bank of Nigeria’s monetary policy stance.

Impact of CBN Injection

Overall, the data suggests a fixed income market adjusting to improved liquidity conditions after the Central Bank of Nigeria (CBN) injected over N1.7 trillion into the financial system through a series of repayments in early February. This injection has played a crucial role in easing liquidity pressures and fostering a more favorable environment for fixed income instruments.