Sell Pressure in Nigerian Bond Market Provokes Yields Surge
Inflation risks triggered selloffs in the Nigerian bond secondary market ahead of fresh supply in the first quarter of 2025. Nigeria’s accelerating inflation rate, which settled at 34.80% in December 2024, has reduced the real return on investment portfolio in the bond market.
Hence, the local bond market traded with a bearish sentiment throughout the week, with mid-dated papers such as the February 2031 and May 2033 bonds seeing offers at 22.10% and 21.20%, respectively, traders said in a note.
Sell pressures heated up the yield curve as investors focused their attentions on mid- to long-dated papers, including February 2031, February 2034, and June 2053, AIICO Capital Limited told investors in a note.
Last week, trading sessions commenced cautiously with mild selloffs as portfolio investors awaited key triggers—the Q1 bond auction calendar and inflation data.
Despite the risk-off sentiment displayed, fixed income market analysts saw some demand for the February 2031 and February 2034 bonds. Yet, trading activity remained subdued due to cautious sentiment ahead of first quarter bond issuance by the Debt Management Office. (DMO)
Analysts said the release of the Q1 2025 FGN bond issuance calendar added to the market’s caution reported last week. DMO plans to reopen the FGN bond maturing on April 17, 2029, and another paper maturing in February 21, 2031. The authority will also issue new FGN bonds maturing in January 2035.
As the bearish sentiments prevailed, the average mid-yield across the curve rose by 39 bps week on week to 20.09%, according to AIICO Capital Limited. The bonds market is expected to continue trading cautiously as participants adopt mixed positions ahead of the auction.
Across the benchmark curve, the average yield increased at the short (+28 bps), mid (+48 bps), and long (+4 bps) segments. The yield expansion was due to investors decision to sell down interest in the JAN-2026 (+107 bps), JUL-2034 (+139 bps), and APR-2037 (+32 bps) bonds. #Sell Pressure in Nigerian Bond Market Provokes Yields Surge CBN Opens FX Window for BDC to Stock up at NFEM Rate
