Bonds Yield Drops as Investors Increase Bets on Naira Assets
The Nigerian government bonds traded positively in the secondary market as the markets await the monetary policy committee of the Central Bank decision on the interest rate head of the fresh supply for September.
Investors showed preference for local bonds across the JUN-32 (-59 bps), JUL-34 (-43 bps), JAN-35 (-34bps) and MAY-33 (-30bps) at the mid-segment (-22bps) of the yield curve.
Overall, average yields declined by 10 basis points to print at 16.49%, suggesting government borrowing costs reduced while investors return eased.
The improved macroeconomic indicators have been fuelling interest in naira assets, and yields are slipping because investors have continued to park their funds in the borrowing instruments.
Selective demand emerged for short to mid-dated bonds, including a few trades on the 2029s at 16.45% and the 2035s at 16.34%. The average mid-yield declined by 10 bps to 16.49%.
Traders said investors will trade cautiously as the market focuses on the monetary policy committee rate decision. The domestic fixed income market closed on a bullish note last week.
The average yields declined by 8 bps week on week to 16.59% last week in the bonds’ secondary market due to intensified demand for the government borrowing instrument.
The short end of the curve saw the strongest moves, with yields falling 18 bps to 16.91% per annum (p.a). The mid-tenor yields edged up by 1bp to 16.66% p.a.; while the long end was flat at 15.82% p.a, Coronation Merchant Bank Research unit said in a report.
Notable buying interest was seen in the Jan 2026 (-82bps to 17.74%) and Mar 2026 (-132 bps to 17.68%) maturities. In the treasury bills segment, sentiment was positive as average yields across the market fell 30 bps to 18.48% p.a.
Short-term maturities eased 13 bps to 17.13% p.a.; medium-term dropped 17 bps to 18.39% p.a.; while the long end compressed by 46 bps to 19.28% p.a. The 3-Mar-2026 bill recorded the sharpest decline, falling 126 bps to 19.41% p.a.
For the OMO segment, average yields contracted sharply by 103 bps to 22.02% p.a. Short-term yields dipped 206 bps to 23.32% p.a.; mid-tenors compressed by 129bps to 21.05% p.a.; while the long end climbed 169bps to 21.95% p.a. Jaiz Bank Falls as Investors Exit Positions Amidst Earnings Forecast
