Nigeria’s Borrowing Costs Fall as Treasury Bills and FGN Bonds Rally on Strong Investor Demand
Nigeria’s borrowing costs eased across its fixed-income market on Thursday, February 19, 2026, as yields on Treasury Bills (NTBs), Open Market Operation (OMO) bills, and Federal Government of Nigeria (FGN) bonds declined. The rally was driven by strong investor appetite, highlighting a renewed confidence in naira-denominated securities despite ongoing liquidity challenges.
Data from secondary market traders showed broad-based yield compression across short, medium, and long-term instruments, indicating cheaper financing for the federal government. Treasury Bills led the decline, with the average NTB yield dropping 14 basis points to 17.3%, marking one of the strongest weekly gains in recent sessions. Specific maturities such as the 77-day, 105-day, and 273-day papers recorded the sharpest drops, with yields falling by up to 117 basis points.
The positive trend extended to OMO bills and FGN bonds. Average yields on OMO bills contracted by 6 basis points to 20.8%, while FGN bonds saw a 3 basis point decline to 15.9%. Notable medium-term bonds, including the APR-2032 bond, experienced a 47 basis point yield compression, reflecting strong demand from domestic institutional investors. This broad rally underscores sustained local participation in government securities markets.
However, Nigeria’s Eurobond market showed a contrasting trend, with yields on dollar-denominated sovereign debt inching up by 1 basis point to 6.90%. Analysts attribute the slight increase to weaker offshore sentiment amid global economic uncertainties. Still, the robust domestic demand for naira instruments outweighed external factors, keeping local borrowing costs on a downward trajectory.
The rally comes as the Central Bank of Nigeria (CBN) continues to signal potential monetary easing amid moderating inflation. At the most recent NTB auction, the CBN raised N1.91 trillion at lower stop rates, providing room for reduced offer rates. While short-term interbank funding rates ticked slightly higher due to marginal liquidity tightening, the overall compression of yields across multiple tenors reflects a supportive environment for government financing and a vote of confidence from domestic investors.
source: nairametrics