Risk-off Sentiment Drives Nigerian Bonds Yield Higher
Risk-off sentiment in the debt market lifted Nigerian government bond yields as investors continue to optimise their portfolio returns.
Traders said they witnessed another round of sell-offs in the secondary market following the repricing of spot rates at the monthly auction in late June.
The pressure pushed average yields up by 3bps to close at 17.82%, driven by softening appetite from local institutional investors for naira-denominated government debt.
Elevated but inverted local bond yields have continued to keep trading activities in the bond market relatively subdued.
In a report, Coronation Merchant Bank research subsidiary said it expects FGN bond yields to remain elevated through Q3 2026, with limited scope for a near-term reversal of the June repricing.
“Our base case is that marginal rates hold in a 17.5–19.0% band on long-dated re-openings into the July auction, conditional on the MPC maintaining its hold at the July 20–21 meeting and inflation prints remaining sticky in the mid-teens”.
Analysts said upside risk would come from a fourth straight inflation uptick, a weaker Naira, or another large Nigerian Treasury bills auction ahead of the next bond sale.
According to Coronation research, downside risk would require a clear, sustained lower inflation print or monetary policy easing signal, neither of which analysts see as most likely before Q4 2026.
For portfolio positioning, analysts said they maintain a preference for shorter-duration over long-dated paper until there is clearer evidence that the inflation re-acceleration is transitory. Nigeria Approves $2.96bn, €200m, N215bn to Boost Economy
