May 18, (THEWILL) — Nigeria’s fixed-income market offered investors some of the highest sovereign returns seen in years during the first quarter of 2026, before the Central Bank of Nigeria’s (CBN) easing cycle triggered a steady decline in yields across Treasury bills and Federal Government bonds.
A review of primary market auction data from the CBN and the Debt Management Office (DMO) shows that investors who entered the market early, especially in January, secured the strongest risk-free naira returns of the quarter.
The rally in yields was driven by the Federal Government’s aggressive domestic borrowing programme to finance its record fiscal deficit, alongside the CBN’s tight liquidity management measures aimed at curbing inflation.
Data from eight Treasury Bills Primary Market Auctions and three FGN bond auctions reveal that January marked the peak of the yield cycle, February signalled a turning point, while March reflected a gradual stabilisation at lower rates.
The 364-day Treasury bill recorded the quarter’s highest stop rate of 18.47 percent at the January 7 auction, making it the best-performing sovereign instrument in Q1 2026. The 182-day bill peaked at 16.65 percent before easing to 16.42 percent by late March, while the 91-day bill remained relatively stable within the 15.80 percent –15.95 percent range throughout the quarter.
On the bond side, the 18.50 percent FGN FEB 2031 bond posted the highest yield-to-maturity stop rate at 17.62 percent during the January auction. Meanwhile, the 19.00 percent FGN FEB 2034 bond recorded the sharpest decline in yields, dropping 200 basis points between January and February.
Investor appetite remained exceptionally strong despite falling rates. Total subscriptions for FGN bonds reached ₦5.88 trillion against an offer of ₦2.45 trillion, while Treasury bill auctions consistently attracted heavy oversubscription.
The yield compression accelerated after the CBN cut the Monetary Policy Rate by 50 basis points to 26.50 percent in February, prompting markets to quickly reprice fixed-income instruments downward.
Although yields remain historically attractive, analysts say Q1 2026 likely marked the peak of Nigeria’s current fixed-income cycle, with investors now entering a lower-yield environment in Q2.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
