FGN Bonds Yields Ease as Investors Rotate Capital from Stocks
The benchmark yield on Federal Government of Nigeria (FGN) bonds declined as investors increased bets across the short, belly and long end of the curve.
Trading activities in the secondary market gained traction with investors positioning in fixed-interest securities as capital continues to rotate away from stocks.
This buying momentum drove average yields down by 3bps to close at 17.79%, fueled by strengthened demand from local institutional investors for naira-denominated government securities
Traders reported demand for bonds with 2027 expiration dragged yields; buying interest in 2032 – 2024 reduced yields at the belly of the curve,
Likewise, there was a sell signal at the long end of the curve, reducing yields on 2053 FGN bonds. The combination of sell-side action reduced short-term yields by a basis point.
At the belly of the curve, yields contracted by 4 basis points, and the long end saw a 5-basis-point contraction. As a result, the average FGN Bond yield contracted by 3bps to 17.79%.
Fixed income market analysts expect FGN bond yields to remain elevated through Q3 2026, with limited scope for a near-term reversal of the June repricing.
At the June bond auction, the Debt Management Office (DMO) increased spot rates on local borrowing instruments to finance the 2026 budget deficit.
The marginal rate on the 10-Year benchmark (22.60% FGN JAN 2035) jumped to 18.34% in June, up 134bps from 17.00% in May and 175bps from 16.59% in April.
Also, the 20-Year (16.25% FGN APR 2037) moved up, settling at 18.35% versus 17.04% in May, a 131bp increase. This is the sharpest single-month repricing on the 2035 line in 2026 to date, reversing the disinflation-driven rate compression seen between January (17.52%) and April (16.59%).
In the first half of 2026, DMO offered ₦4.95 trillion across bond auctions, received subscriptions of ₦9.04 trillion, and allotted ₦4.67 trillion to market participants.
Demand was particularly robust in the first quarter, with ₦5.88 trillion of bids against a ₦2.45 trillion offer, although auction momentum moderated in the second quarter as subscriptions declined to ₦3.16 trillion against a slightly higher ₦2.50 trillion offer.
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