Nigerian Bonds Yields Gapping on Macro Sentiment, Buying Actions
The Nigerian fixed-income market closed positive on Thursday as strong local demand for government borrowing papers – bonds- pulled average yield down by 9 basis points (bps) to 17.39%, traders said.
Influenced by disinflation and the interest rate hold decision, the FGN bond market traded on a mixed note with a bullish undertone, as investor appetite strengthened for on-the-run mid-tenor bonds.
A lower inflation rate strengthened real returns in the debt capital market, with market consensus signalling Nigeria will maintain a hawkish stance in 2026 due to the 2027 election.
In addition, fixed interest securities analysts anticipate spot rates repricing and a sustained decline in yields to persist as the Debt Management Office (CBN) steps up local borrowings.
The market recorded significant buying interest in the mid-segment of the curve, specifically for the bonds maturing in January 2035, April 2037, and June 2038.
Early quotes for these debt papers ranged from 17.90% to 17.75%, based on information from Herwood Capital Limited
Fixed income market analysts said that by mid-session, mild demand emerged, causing yields to ease slightly, with the Jan 2035, Apr 2037, and Jun 2038 bonds quoted around 17.80%–17.65%.
However, towards the close of the session, activity moderated as sentiment shifted, and the same bonds were quoted around 17.90%–17.80%, Herwood Capital told investors in a note.
Traders spotted renewed interest in the Feb 2031, Jun 2032, and Feb 2034 bonds, which were quoted at 17.20% offer, 17.40% offer, and 17.60% offer, respectively.
On the short end of the curve, the Apr 2029 bond was quoted at 17.65%/17.50%, while on the long end, the Jun 2053 bond was quoted at 15.30% bid. The average return on Nigerian short-term borrowing instruments is currently above returns on local bonds. Interbank Funding Rates Diverge on Surplus Financial System Liquidity
