Sell Pressure Hits Nigerian Bonds, Yield Rises to 16.70%
The benchmark yield on Federal Government of Nigeria (FGN) bonds climbed to 16.70% in the secondary market amid negative investor sentiment.
A slew of fixed-income market participants anticipate sell pressure to persist in the new week amid expectations of a surge in headline inflation.
The consumer price index is expected to surge for the third straight month in May, driven by higher prices and a relatively weaker local currency.
Fixed income market analysts told MarketForces Africa that real return on investment has continued to moderate amid accelerating inflation, while the benchmark interest rate was kept at 26.5% at the monetary policy meeting last month.
In contrast to early-year predictions, Nigerian government local borrowing has been moderate, resulting in tight monthly bond supply by the Debt Management Office (DMO).
While fixed income market yields remain elevated, local bond returns have been tightened by the Debt Office’s efforts to reduce government borrowing costs. This is reflected in weak bond subscription at the authority’s April auction.
The market has seen yields on short-term instruments exceed bond rates due to differential pricing of naira assets between the Debt Office and the monetary authority. At the current level, analysts said inflation and Nigerian bond yields are drawing closer.
Last week, bearish sentiments prevailed in the FGN bond market, as expansions at the short (+5bps) and long (+3bps) ends of the curve masked contractions at the mid (-2bps) segment.
As a result, the average yield rose by 2bps to settle at 16.70% ahead of the monthly bond auction for the month of June 2026. Nigerian Bonds Yield Climbs as Investors Dump Debt Papers
