Nigeria’s fixed income market is expected to experience a major liquidity boost in May 2026, with projected inflows reaching N10.53 trillion, according to the Financial Markets Dealers Association (FMDA). The outlook, contained in its latest monthly report, points to stronger market liquidity conditions compared to April and sets the stage for active trading and potential shifts in interest rate direction.
A major driver of this surge is Open Market Operations (OMO) maturities, which are projected to dominate inflows at N7.17 trillion. This marks a significant increase from the previous month and reinforces OMO instruments as the most influential liquidity channel in Nigeria’s financial system. Their scale continues to play a key role in shaping short-term funding conditions for banks and investors.
Other contributing sources of liquidity include Treasury bill maturities, expected to rise to N1.05 trillion, alongside Federation Account Allocation Committee (FAAC) disbursements estimated at N1.8 trillion. Although FAAC inflows are slightly lower than April’s figures, they remain a steady support base for overall market liquidity, helping sustain cash flow across the financial system.
In the corporate debt space, activity is also expected to pick up modestly. Corporate bond coupon payments are projected to jump significantly to N95.09 billion, while new corporate bond maturities and commercial paper repayments will add further liquidity. Though smaller in scale compared to sovereign instruments, these flows are expected to encourage reinvestment into higher-yield assets.
Overall, the FMDA report suggests that Nigeria’s fixed income market will remain highly liquid in May 2026, potentially influencing investor behaviour, yield movements, and portfolio rebalancing strategies. With strong inflows continuing to dominate the system, market participants may see increased competition for returns across government and corporate debt instruments.
source: Nairametrics