Nigerian Bonds Yield Surges over Subdued Investors’ Appetite
Investors lost appetite for Nigerian government bonds in the secondary market ahead of the Debt Management Office (DMO) monthly auction. To patch the budget deficit in 2025, the authority auctions N3.51 trillion in local bonds via 12 primary market auctions.
Total subscriptions for the year printed at N8.956 trillion, according to data released by AAG Capital Limited. The DMO raised N4.979 trillion from bond investors in the market with last-moment yield repricing.
The upward spot rates adjustment in the December auction, however, set the tone for investors’ expectations in 2026. The bond market has been tightened as an expected surge in headline inflation douses sentiment.
Investors have been rotating positions across the long durations, keeping average yield on pendulum swings. On Tuesday, the market closed on a negative note, with average yields climbing 12 bps to 16.81%, indicating diminished and cautious confidence among domestic investors in local fixed-income assets.
Fixed income market analysts reported that investor participation remained cautious across the curve, with sell-off sentiment driving market direction. Trading activities were subdued, with most maturities closing flat, according to AIICO Capital Limited.
However, selling pressure was evident on select mid- to long-dated papers, particularly the 17-Apr-2029, 21-Feb-2031, and 15-May-2033 bonds, which recorded yield upticks of 25 bps, 54 bps, and 53 bps, respectively.
Similarly, the 21-Jun-2038 and 21-Jun-53 bonds saw yield increases of 58 bps and 37 bps, while mild buying interest emerged on the 21-Feb-34 bond, which recorded a 10 bps yield compression to close at 17.84%. Analysts at AIICO Capital expect the bond market to remain cautious ahead of the December CPI data.
In contrast, Nigerian Eurobonds ended bullish, with average yields declining 12 bps to 7.16%, demonstrating strengthened and positive appetite from international investors for the country’s dollar-denominated sovereign debt. Daily FX Update: Naira Falls to N1,495 in Parallel Market
