Yield on Nigerian Bonds Falls to 19% Ahead Q2 Supply
The Nigerian fixed income market recorded a strong wave of positive sentiment, both locally and in the international space, as investors showed renewed confidence by positioning with robust buy-side interest—particularly along the longer end of the curve.
At the close of the trading session last week, the average yield on Nigerian government bonds declined by six basis points to 19% ahead of the second quarter of 2025 supply by the Debt Management Office (DMO).
The market anticipates the authority would increase borrowing temperature to close Nigeria’s fiscal earnings gap triggered by uncertainties in the global commodities market as the oil price benchmark fell below 2025 budget assumptions.
Traders, however, noted buying interests at the short end (-16 bps), particularly the JAN 2026 (-68bps) and MAR 2026 (-106 bps), while the market saw mild selling interests by offshore investors on the 35s, with the JAN 35 increasing by 5 bps.
Ahead of the second quarter borrowing calendar announcement, trading activities have been relatively cautious. Activity was largely subdued, with modest interest on short- to mid-dated maturities, particularly the February 2031 and May 2033 papers.
The May 2033 bond saw slight demand early in the week, compressing yields marginally while traders maintained investors will remain on the sidelines in the interim.
Fixed income market analysts said there were selloffs from offshore players, particularly on the JAN-2026 bond. Across the benchmark curve, the average yield increased at the short (+26bps) end, driven by selloffs of the JAN-2026 (+132bps) bond.
Meanwhile, the bond yield curve decreased at the mid (-3 bps) and long (-2 bps) segments following demand for the FEB-2031 (-12bps) and JUN-2053 (-16 bps) bonds, respectively. Overall, the average yield declined by 6 bps to settle at 19.0%.
“Over the medium term, we expect a moderation in bond yields, influenced by anticipated dovish monetary policy stance and sustained improvement in demand and supply fundamentals in Q2-2025,” Cordros Capital Limited said in a note.
Nonetheless, persistent inflationary pressure remains a downside to our expectations for a dovish tilt in monetary policy stance in the near term.
The latest report on Nigeria’s consumer price index (CPI) shows that in March 2025, the headline inflation rate rose to 24.23% relative to the February 2025 headline inflation rate of 23.18% and ahead of Cowry’s projection of 23.40% for March 2025.
Disinflation comes following two consecutive months of downtrend after the CPI rebasing efforts, and the March 2025 headline inflation rate showed an increase of 1.05% compared to the February 2025 headline inflation rate and was due to factors such as currency depreciation, price hikes from seasonal purchases, and an increase in PMS. #GCR Affirms Dangote Cement AA+ (NG) Rating
