Nigeria’s fixed-income market is expected to receive about N11 trillion in liquidity inflows in October, which Cordros Capital says could sustain reinvestment demand and put further downward pressure on yields.

According toCordros Capital’s September 2026 Fixed Income Monthly Review, the projected inflows comprise N9.05 trillion in Open Market Operations (OMO) maturities, N1.30 trillion in Nigerian Treasury Bill (NTB) maturities and N650.67 billion in FGN bond coupon payments.

The firm expects the liquidity to support demand, particularly at the short end of the market, although fresh OMO and NTB issuance could sterilise a significant portion of the inflows and limit the eventual impact on yields.

OMO maturities dominate October inflows:

OMO maturities represent the largest source of expected October liquidity at N9.05 trillion, accounting for approximately 82% of Cordros’ total estimate. The concentration means the timing of OMO repayments and the scale of subsequent CBN sterilisation could play an important role in determining liquidity conditions during the month.

Cordros expects the inflows to sustain reinvestment demand across fixed-income securities.

  • OMO maturities are projected at N9.05 trillion, while NTB maturities are estimated at N1.30 trillion.
  • FGN bond coupon payments are expected to contribute another N650.67 billion to system liquidity.

The three components bring expected October inflows to approximately N11 trillion.

Cordros expects fresh OMO and NTB auctions to absorb a significant portion of the liquidity, limiting the amount that ultimately remains in the financial system.

The balance between the returning cash and new issuance will therefore help determine whether the reinvestment pressure seen in September persists through October.

Reinvestment demand drives September rally:

September provides an indication of how substantial maturity inflows can affect the fixed-income market. Cordros said N13.14 trillion in maturing OMO securities fuelled reinvestment demand during the month, while average banking-system liquidity increased to a net-long N4.30 trillion from N4.12 trillion in August.

  • The increased liquidity coincided with declining money-market and fixed-income yields.
  • The overnight rate declined 174 basis points to 20.4%, while aggregate Treasury bill yields fell 124 basis points to 18.0%.
  • Average OMO secondary-market yields declined 150 basis points to 18.8%, while the average OMO stop rate dropped 205 basis points to 17.80% from 19.85% in August.
  • The DMO received N10.22 trillion in NTB bids against N2.05 trillion offered during September before allotting N2.42 trillion, with the long-end bid-to-offer ratio reaching 10.2 times at the final auction.

Average FGN bond yields declined 108 basis points to 15.9%, although bond demand was weaker than bill demand, with a bid-to-offer ratio of about 1.5 times.

The rally also followed the Monetary Policy Committee’s September 22 decision to reduce the Monetary Policy Rate by 350 basis points to 23% from 26.5%.

Sterilisation could limit yield decline:

Cordros expects ample liquidity and foreign demand to continue supporting Nigerian bonds and Treasury bills, but it identified several factors that could prevent an unrestricted decline in yields. These include inflation, fresh government issuance and the CBN’s use of OMO auctions to absorb excess liquidity.

  • The firm forecasts September inflation at 15.40%, marginally above the 15.39% recorded in August, and consequently sees limited room for additional policy-rate reductions.
  • Large OMO and NTB auctions could sterilise a substantial part of the N11 trillion expected to return to the financial system.
  • Fresh government borrowing will compete for the same liquidity that could otherwise flow into existing fixed-income securities.
  • Cordros expects Nigeria’s inclusion in JP Morgan’s GBI-EM Edge index to support foreign participation, with Nairametrics previously reporting a 7.4% weighting in the index.

Nigeria’s inclusion in the GBI-EM Edge does not represent readmission into the flagship GBI-EM Global Diversified index, meaning passive inflows may be smaller than under a full return.

Cordros therefore expects October liquidity and foreign demand to remain supportive of bonds and bills, while sterilisation, new issuance and inflation risks could moderate the extent of any further decline in fixed-income yields.