In March 2025, money market rates contracted as the average Open Buy Back and Overnight lending rate declined by 148bps and 147bps to 30.17% and 30.63% compared to the previous month. However, despite the moderation in interbank rates, liquidity was constrained as various primary market auction settlements and CRR debits outweighed inflows from OMO maturities, FAAC disbursement, FGN coupon (c. NGN400.00bn), as well as bond and NTB maturities of about NGN562.00bn. As such, analysis of activities at the discount window showed that, in a bid to meet liquidity needs, banks were net borrowers to the tune of NGN11.30trn, although lower than NGN20.17trn net borrowing at the discount window in February 2025. We expect this trend of congested liquidity to persist in April, as the Apex bank continues to utilize OMO sales and CRR debits to manage system liquidity as the need arises.

Going forward, our outlook for the fixed income market in April is tilted towards flattish performance as investors will likely adopt a cautious approach amid the uncertainties in the global economy. Although domestic factors including lower inflation could push yields downward, we envisage that this movement might not be significant, given the need to keep rates attractive for both local and foreign investors in a bid to stabilize the foreign exchange market amid recent pressures. Kindly find HERE, the full report, covering our analysis and considerations.