Nigerian Bonds Yields Roll Down as Investors Lock Positions
Nigerian bond yields rolled down across the curve due to sustained hunting for the naira assets amidst supply shortage expectations and spot rates repricing in the recent past auction.
Investors have gotten a whiff about policy rate probability, and the fact that the Debt Management Office (DMO) borrowing has lessened compared to a similar period in 2024 has sent jitters across the fixed income market.
The average yield on federal government of Nigeria bonds tracked lower in the secondary market ahead of inflation data release in the new week. The consumer price index decelerated for two consecutive months, and analysts are projecting a further slide following the rebasing exercise.
Last week, the bond market was bullish as market participants increased the demand following the recently released Q3 bond auction calendar. Accordingly, the average yield for bonds declined by 72 bps to 16.8% as investors sought safety and return, prompting broad-based demand that compressed yields across the curve.
The average yield on local bonds decreased at the short (-71 bps), mid (-92 bps), and long (-28 bps) segments, Cordros Capital Limited said in its market update. The local bond yield contraction was driven by heightened demand for the JAN-2026 (-161 bps), FEB-2031 (-120 bps), and APR-2037 (-84 bps) bonds, respectively.
The DMO intends to reopen the APR-2029 and JAN-2032 bonds during the quarter, with about N60.00 billion on offer across both instruments. Yields on the Nigerian bonds maturing in Feb 2031 and May 2033 dropped by as much as 40 bps as markets looked forward to reopenings of the 17 April 2029 and 25 June 2032 papers.
Midweek, the rally extended with heightened interest in the Feb 2031s, Jun 2032s, and May 2033s, with yields dipping as low as 16.40%.
This week, the fixed income market reflected a cautiously optimistic tone as investors recalibrated their strategies in light of Nigeria’s fiscal outlook, fluctuating oil prices, and mounting global uncertainties, including geopolitical tensions and tariff skirmishes.
Looking ahead, market activity in the fixed income space is expected to stay influenced by expectations of stable or declining interest rates.
Investors will continue to weigh the evolving local macroeconomic picture—including fiscal discipline and oil revenue trends—against global headwinds, using the balance of risks and returns to guide their portfolio decisions. Money Market Rates Spike as CBN Actions Squeeze Liquidity
