Rally in Sovereign Debt Drives Nigerian Benchmark Bond Yield Lower
With a sustained rally in sovereign debt, the benchmark yield on Nigerian government bonds fell to 16.35% as fixed-interest-income investors continue to increase bets on naira assets.
The secondary market saw soft demand for local borrowing papers in the belly of the curve, with short-dated bonds selling off on Thursday.
With inflation moderating to 14.63% and monetary easing that put the policy rate at 23%, real returns on investment have moderated to 8.37%, the lowest in 2026.
Investors continue to lock in yields on older debt, with a sustained preference for long-duration assets as spot rates reprice to align with a lower interest-rate environment.
The market dynamics continue to shape how asset managers and other investors position across the curve in the bond secondary market.
On Thursday, analysts reported a contraction in the mid (-4bps) segment, offset by expansion at the short end (+2bps), pushing average yields down 1bp to 16.35%.
The market opened quietly, with the 2036 and 2038 maturities quoted around 17.00%/16.85%. The 2033s were quoted at 16.85%/16.80%, while the 2035s were offered at 16.75%.
Trading activity gradually picked up as the session progressed, with investors initially maintaining a cautious stance. Buying interest later emerged in the 2038 maturity, pushing yields lower to 16.85%/16.75%, with trades executed around 16.80%.
Traders said they expect the market to remain cautious in the near term, although buying interest may persist. Investors are likely to remain selective, focusing on maturities offering favourable entry levels.
Further buying interest could drive yields lower, although the extent of any further yield compression will depend on sustained demand and the availability of offers in the market, according to Herwood Securities Limited. Oyedele Defends Nigeria’s $21.7 Billion Borrowing Proposal
