Nigerian Bond Trades Soft, Firm Sets Yield Target for April
The average yield on Nigerian government bond cleared at 18.71% as trading activity softened in the secondary market amidst fresh target for April by firms, and other portfolio assets managers.
Trading activities opened on calm note as market participants reassessed their portfolios ahead of the new quarter bonds supply. Traders reported that average bond yields remained unchanged despite the buying interest witnessed on the JAN-26 paper.
Across the benchmark curve, the average yield contracted at the short (-4bps) end due to buying interest in the JAN-2026 (-27bps) bond, but remained unchanged at the mid and long segments.
Investment firms reported limited activity on mid-tenor papers (Feb 2031 and May 2033). The session ended with flattish average mid-yield.
Yield on the Apr-29 bill crept up by a single basis point to 19.27%, given the absence of significant trades in the secondary market after the holiday. Fixed income market analysts expect the current market sentiment to persist.
March 2025 witnessed a notable correction in the Nigerian fixed income market, with the yield curve experiencing an upward shift that partially reversed the gains of the preceding month, Erad Partners Limited said in a report.
The firm stated that this shift was primarily attributable to a persistent combination of constant supply and prevailing system liquidity shortages, which exerted upward pressure on yields.
Erad Partners said despite this broader trend, investor appetite remained robust at the short end of the curve. This sustained demand provided a degree of support, preventing a more severe yield reversal. Notably, the upward movement in short-term yields was contained just below the critical 20% mark, with the 364-day Treasury bill discount rate settling at 19.94%.
On a positive note, the disinflationary trend continued in March, with the headline inflation rate declining by 130 basis points from 24.48% to 23.18%. This ongoing moderation in inflation provides a supportive backdrop for the fixed income market, although its impact was offset by supply and liquidity dynamics.
Looking ahead to April, Erad Partners Limited said it anticipates a period of consolidation in the fixed income market. For the 10-year bond, a fair value (FV) gap range of 19.5% to 20.25% appears reasonable, given the prevailing local fundamentals.
The continued decline in inflation will likely underpin this range, but supply-side pressures and liquidity conditions will remain key determinants.
Shorter-dated instruments are expected to trade in close correlation with the inflation trajectory, with potential for further yield adjustments as the disinflation process unfolds. #Nigerian Bond Trades Soft, Firm Sets Yield Target for April CBN to Open N800bn Treasury Bills for Subscription
