Last week, activities across the Nigerian financial markets were largely shaped by liquidity dynamics, as stakeholders navigated shifts in global dynamics. The fixed-income segment trended in unison, as the bond auctions and OMO supply steered yields within a defined trading corridor, while secondary market activity increased on select tenors. Equity markets sustained mild positive momentum supported by interest in high volume, actively traded stocks, despite broader investor caution and risk appetites. On the currency front, the Naira held relatively firm, aided by improved FX inflows and supportive policy measures, reflective of a stabilizing trend with external buffers.
Globally, commodities moved in divergent directions, with crude oil extending losses amid supply overhangs and demand uncertainties, while gold surged to new highs on safe-haven flows. This divergence highlighted the fragile balance of global markets and their ripple effect on Nigeria’s outlook, where oil revenue remains central to fiscal stability. Further, investor behaviour revealed a tilt toward medium-term debt instruments and selected equity positions, as market participants weighed domestic liquidity surpluses against external risks. The commodities markets ended the week in a mixed position; gold posted an intra-week gain of 1.51% to close at $3,885/oz, crude oil extended its losses; WTI was down by 3.9% at $60.70, and Brent shed 4.8% to $64.40 per barrel. While the NGX ASI advanced 0.85% to 143,584.00 points.
System liquidity positions opened with a surplus of over ₦5.7 trillion on Friday, marking a weekly gain of 0.13% after peaking at ₦6.57 trillion on Tuesday. Money market rates held steady for the Open Repo Rate (OPR) at 24.50% and Overnight (O/N) eased slightly to (-0.48%) 24.88%, closing the week at 24.50% and 24.89%, respectively. In the FX market, the Naira traded between $/₦1,445.00 and $/₦1,486.50 during the week, closing at $/₦1,4690.00 on Friday.
The result of the Federal Government of Nigeria (FGN) Bond auction conducted by the Debt Management Office (DMO) on September 29th 2025 was indicative of robust demand driving yields sharply lower across the 5-year and 7-year tenors, with an allotment to subscription ratio of 37.9% and 47.5% respectively. The 5-year paper was oversubscribed by 2.3x, while the 7-year attracted an unprecedented 10.3x oversubscription, reflecting the weight of surplus liquidity in the system, estimated at over ₦5 trillion, and the absence of OMO auctions to sterilize cash. Stop rates compressed significantly, with the 5-year clearing at 16.00% (-195 bps) and the 7-year at 16.20% (-180 bps), based on strong participation and expectations of lower yields in the future.
A key highlight at the auction was the unusually large allotment on the 7-year paper, where ₦488.8 billion was issued against an initial offer of ₦100 billion, suggesting that the DMO seized the opportunity to frontload funding at favourable rates.
The outcome signals confidence in the strength of domestic demand and reveals investor preference for medium-term tenors (in the absence of longer tenors) that balance return with duration risk. The scale of demand also points to a market flush with cash, reallocating aggressively into bonds amid easing FX pressures and limited high-yield alternatives. The result also implied downward pressure on secondary market yields, especially in the mid-curve, with likely mark-to-market gains for successful bidders.
BONDS TENOR | AUGUST 2030 | JUNE 2032 |
AUCTION DATE | 29-09-2025 | 29-09-2025 |
SETTLEMENT DATE | 02-10-2025 | 02-10-2025 |
MATURITY DATE | 27-08-2030 | 25-06-2032 |
TENORS | 5-YEAR | 7-YEAR |
AMOUNT OFFERED (₦) | 100 BILLION | 100 BILLION |
SUBSCRIPTION (₦) | 231.792 BILLION | 1,028.204 BILLION |
AMOUNT ALLOTTED (₦) | 87.798 BILLION | 488.826 BILLION |
RANGE OF BIDS (%) | 15.0000 – 17.9450 | 14.9500 – 19.2000 |
STOP RATES (%) | 16.0000 | 16.2000 |
PREVIOUS STOP RATES (%) | 17.9450 | 18.0000 |
The OMO auction conducted on October 3rd signalled the market’s continued liquidity overhang and shifting yield expectations. The CBN offered a total of ₦600 billion across three tenors but sold just ₦98 billion on two tenors, reflecting a highly selective stance despite aggressive subscription levels. The 88-day paper with bids of 1.46x was unsold. Similarly, the 102-day bill attracted robust demand of 3.41x its offer, yet only 35% on offer was allotted at a stop rate of 20.49% (-600bps). The standout was the 123-day maturity, which drew an outsized 11.7x subscription, with 14% allotment to offer and a stop rate of 20.61% (-583bps).
Overall, the auction highlighted three critical dynamics: strong appetite for short-term risk-free assets amid excess system liquidity; a deliberate yield compression strategy by the CBN, with stop rates significantly below prior levels; and a liquidity sterilisation approach that prioritises rates over volume absorption. While investors remain eager to lock into decent yields, the CBN’s posture suggests an effort to anchor short-term rates even lower, aligning with easing pressures in the funding market and broader monetary policy recalibration.
TENOR | AUCTION DATE | OFFER (₦‘ B) | BIDS (₦‘ B) | RANGE OF BIDS (%) | STOP RATES (%) | PREVIOUS STOP RATES (%) | TOTAL SALE (₦‘ B) |
88-DAY | 03-10-2025 | 200.00 | 346.00 | 17.0000-23.4100 | 0.00 | 26.4900 | 0.00 |
102-DAY | 03-10-2025 | 200.00 | 641.10 | 18.0000-23.1800 | 20.4900 | 26.4900 | 70.00 |
123-DAY | 03-10-2025 | 200.00 | 2,329.96 | 20.4500-24.7400 | 20.6100 | 26.4400 | 28.00 |
The Naira appreciated consistently against the US dollar during the week, supported by improved FX liquidity and positive sentiments. The currency opened at $/₦1,476.35 on September 29, and closed at $/₦1,465.67, indicating a weekly gain of ₦10.68, further confirming the efficacy of sustained interventions and a more balanced flow of foreign exchange supply and demand.
Nigeria’s external reserves posted modest growth over the reviewed week, with gross reserves rising to $42.35 billion on September 30 from $42.23 billion on September 25, marking a WTD gain of $128.1 million (0.30%). Similarly, liquid reserves increased to $41.68 billion from $41.55 billion over the same period, representing a WTD gain of $130.1 million (0.31%). The steady build-up reflects improved FX inflows and cautious reserve management by the monetary authorities.
The secondary market was active during the week, with activity peaking in the aftermath of the bond auction; trading tight bands between 15.50% and 16.20% where the market was largely offered, as supply outweighed demand. Mid-tenor papers traded within the upper 15.00% levels, with concentrated interest on APR-2029s, FEB-2031s, FEB-2034s, MAR-2035s, and JUN-2053s, while heightened selling pressure was observed on the 2032s and 2033s late in the week. Activity on T-bills and OMO papers was moderate, especially at the mid-to-long end of the curve, particularly T-bills maturing 20-Aug., 19-Feb., 3-Sept., 17-Sept., in addition to OMO maturities on 7-Apr., 17-Feb., 20-Jan., 10-Mar., and 17-Mar. The sustained appetite across sovereign bonds and money market instruments signal investors’ positioning for attractive returns despite surplus liquidity
The Central Bank of Nigeria’s (CBN) latest circular: FMD/DIR/CON/OGC/042/075 dated 29th September 2025, represents a bold structural reform, as it assumes full control of the trading and settlement infrastructure in the fixed-income market. The move, according to its Acting Director, Dr Okey Umeano, is designed to enhance “transparency, efficiency, and regulatory oversight,” while strengthening monetary policy transmission. Its phased rollout for User Acceptance Testing is scheduled for October, while the pilot settlement is scheduled for November, and the eventual full takeover is scheduled for December, signalling an effort to minimise disruption and reassure stakeholders that the transition will be orderly and market-friendly.
The potential benefits are significant. Centralized settlement under the CBN could reduce counterparty and operational risks, improve regulatory visibility, and foster stronger investor confidence in Nigeria’s debt market. By eliminating fragmentation in clearing and creating a unified platform, the CBN may also enhance the speed and accuracy with which policy decisions are reflected in bond yields, making the financial system more responsive. In the medium term, this could lower risk compensation, narrow bid-ask spreads, and attract renewed foreign portfolio inflows, especially at a time when reserves and the Naira are showing signs of stability.
Gold prices surged to fresh records this week, driven by safe-haven demand, the Federal Reserve’s rate cut expectations, and the escalating US government shutdown. On Sept. 29, bullion broke above $3,800 for the first time, closing at $3,827.94/oz (+1.6%) after PCE inflation data reinforced bets on Fed easing. The next day, on Sept. 30, prices eased slightly to $3,822.26/oz (-0.1%) as profit-taking set in ahead of China’s Golden Week, though gold still capped its strongest quarterly gain since 1979. On Oct. 1, bullion hit a new all-time high of $3,884.63/oz (+1.6%), driven by weak US private payrolls and the onset of the federal shutdown, before extending its rally to $3,895.88/oz (+0.3%) intraday on Oct. 2 as traders priced in multiple Fed cuts. By Oct. 3, gold held firm, with records at $3,885.78/oz (+1.3%), securing its seventh consecutive weekly gain, leaving the metal up nearly 50% year-to-date, with strong central-bank demand, ETF inflows, and persistent geopolitical tensions supporting momentum.
All Share Index (ASI) Snapshot
The Nigerian All-Share Index (ASI) maintained a positive tone through the week, edging higher on sustained investor interest in large-cap stocks. The index opened at 142,378.00 on September 29, advancing by 1,206 points and a week-to-date (WTD) gain of 0.85%, to close at 143,584.00 on October 3, as sustained buying interest lifted the market following the Independence Day break.
Crude oil prices closed the week deeply in the red as supply shocks overwhelmed sentiment. WTI crude tumbled from $63.6 on September 29 to $60.7 per barrel by October 3, marking a week-to-date decline of 3.9%, while Brent slumped from $69.0 to $64.4 per barrel, posting a steeper 4.8% WTD loss. The selloff was powered by OPEC+ signalling an aggressive November output hike of up to 500,000 bpd, the restart of Kurdish crude flows to Turkey after a two-year hiatus, and swelling US inventories across crude, gasoline, and distillates. Risk aversion linked to the ongoing US government shutdown further pressured the demand outlook. Although Brent recovered modestly on Friday, prices remain pinned near four-month lows, signalling investor caution ahead of the OPEC+ meeting this weekend, where the production policy will determine whether the rout extends or stabilises into mid-October.
As the week unfolds, the fixed-income market awaits the release of the Q4 2025 issuance calendar on both the Nigerian Treasury Bills (NTBs) and Federal Government Bonds. The question on the mind of investors remains, “Will the Federal Government finally leverage the financial market to fulfil its borrowing needs for the 2025 budget in Q4, or will the FG lean on alternative sources for financing?” With the expectation of over 1 trillion in OMO and NTB maturities, there are increasing concerns over liquidity absorption in a system already awash with cash.
By: Sandra A. Aghaizu
As Q4 begins, Nigeria’s financial market stands at a crossroads.
Will the Federal Government cast its net into the bond market to fund the 2025 budget or seek other shores?
With over ₦1 trillion in maturing bills returning like a tide, liquidity is rising.
But with the right moves, this wave can be channelled, not feared.
The market is ready.
The tools are in place.
And hope, like sunrise, is quietly breaking through.
