Liquidity surges #6.6trn, as Eurobonds rally

The Nigerian financial sector witnessed a dramatic surge in system liquidity, which expanded sharply to ₦6.62 trillion from a previous position of ₦1.18 trillion.

Despite this massive influx of capital, the money market experienced a slight tightening as the Overnight rate edged upward by 4 basis points to settle at 22.17%.

In contrast to this marginal shift, both the Nigerian Overnight Funding Rate and the Open Repo Rate held firm, remaining unchanged as the market absorbed the liquidity build-up.

Fixed-income instruments saw a wave of modest optimism, particularly within the Federal Government Bond space.

The average yield on FGN bonds declined by 1 basis point to 16.08%, though market participants noted that activity at the long end of the curve remained notably subdued.

This suggests that while sentiment is improving, investors are maintaining a cautious stance regarding long-term positioning.

A similar trend played out in the Nigerian Treasury Bills market, where mild buying interest steered average yields down by 1 basis point to 17.47%.

On the international stage, Nigeria’s Eurobonds continued their impressive bullish run. Average yields compressed significantly by 7.6 basis points to finish at 6.69%, down from 6.77%.

This external rally appears to be fueled by a shift in global risk appetite, as international investors react positively to renewed diplomatic negotiations between the United States and Iran.