In April 2026, interbank lending rates were stable for the better part of the period, as the Open Buy Back and Overnight lending rates averaged 22.00% and 22.25%, respectively, the same as what was recorded in the previous month. This was despite the lower (-27.27% MoM) liquidity balance, as system liquidity averaged NGN4.80trn in April. Although liquidity remained positive, the slowdown from the previous month was driven primarily by the decline in Standing Deposit Facility (SDF) balance, which averaged NGN4.62trn (vs. NGN6.45trn in March).

Furthermore, there was a net outflow from Open Market Operation (NGN2.94trn), which further compressed liquidity, as the central bank maintained its liquidity sterilization strategy in the review period. However, system liquidity stayed positive, supported by NGN3.39bn net credit from other primary market sources. 

Looking ahead, we expect mixed sentiment across the domestic fixed income market, with yields staying relatively sticky at these levels. Specifically, we do not expect a material movement in yields, as investors remain cautious of external headwinds and inflationary risk that could affect monetary policy actions.

Thus, we envisage slight selling pressure, especially across shorter term and mid tenor instruments. However, given the sustained optimal liquidity, we expect to see cherry-picking mostly by local investors, which should curtail any upward pressure on yields.

Kindly find HERE, the full report, covering our analysis and considerations.