Risk-off: Benchmark Yield on Nigerian Bonds Rises to 15.92%
The benchmark yield on Nigerian government bonds rose 11 basis points week on week to 15.92% as ongoing spot rate repricing and weakening real interest rates dampened appetite.
Some debt market analysts spotted a risk of capital rotation as Nigerian yields shift downward while the Federal Reserve’s rates hike continue to drive U.S. Treasury yields to a multi-year high.
Separate analysts agreed that the Nigerian fixed-income market is set for broad yield compression following the Monetary Policy Committee’s recent decision.
They said a 3.50% reduction in the benchmark interest rate will drag Nigerian yields lower in the fourth quarter – anticipating lower rates on bonds at the Debt Management Office (DMO) scheduled monthly auction in Oct.
“We expect this decision to put downward pressure on fixed income yields as investors adjust to the lower policy rate”, Meristem Securities Limited said in a post-MPC report.
The consumer price index (CPI) figure saw headline inflation moderating to 15.39% in August 2026. The market expects disinflation to persist, reducing real returns on debt instruments.
Last week, the Nigerian secondary bond market posted a bearish performance, supported by weak investor demand across key maturities.
The decreased buying interest drove bond prices lower and pushed yields higher, reflecting subdued investor sentiment toward domestic fixed-income instruments, fixed-income analysts at Cowry Asset Management Limited reported.
Consequently, the average FGN bond yield increased by 11 basis points (bps) week-on-week to 15.92%.
Looking ahead, analysts expect cautious trading in the fixed-income market in the near term, as subdued investor demand and elevated yields may continue to weigh on bond prices.
However, attractive yields could gradually support demand, particularly if liquidity conditions improve and investors reposition across the yield curve, according to Cowry Asset.
Sellers returned to the 5-year, pushing its yield up 0.10 percentage points to 16.25%, while buyers of the 10-year cut its yield 0.06 points to 15.95%, AIICO Capital Limited said in its investor note.
The 3-, 7-, and 20-year FGN bond yields held at 16.10%, 16.07%, and 14.66%. The average edged up, and every tenor now yields 0.68–1.04 points more than at the start of the year, traders said.
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