Yield on Nigerian Bonds Rises as Inflation Twists Sentiment
Benchmark yield on Nigerian government bonds rose slightly in the secondary market as investors switched to a cautious stance amid rising inflation. The real return on fixed-interest securities has decreased, though it remains positive, following a series of buying actions to lock in yields.
At the current pace, Nigerian Treasury bills remain strong despite their shorter tenors compared to local bonds. Traders reported the market was weighed down by weak investor demand and increased selloffs across most maturities compared to the previous week.
Sell pressures were seen across the curve amid restrained appetite for local fixed-income securities. The average yields edged up 1 basis point to 16.11% ahead of the fresh May supply.
Fixed income market analysts said they expect the inflation surge to influence spot rate pricing at the Debt Management Office’s primary market auction this month.
In its commentary note, Cowry Asset Limited said sentiment in the domestic bond market is expected to remain cautious in the near term as investors continue to assess liquidity conditions, inflation expectations, and the direction of monetary policy.
“Elevated yields in the primary market may also sustain sell-side pressure in the secondary market, particularly across mid- to long-dated maturities. However, intermittent bargain hunting could emerge should yields rise to more attractive levels”.
Nigeria’s inflationary environment showed a mixed but generally improving picture in April 2026, according to the latest CPI report. Headline inflation edged higher to 15.69% year-on-year from 15.38% in March, marking a second consecutive monthly increase and signalling a brief pause in the earlier disinflation trend that had lasted nearly a year.
However, on a month-on-month basis, inflationary pressures eased significantly, with headline inflation slowing to 2.13%, suggesting that while prices are still rising, the pace of increase has moderated.
This moderation was largely driven by food prices, which remain the dominant force in the inflation basket. Food inflation declined sharply year-on-year to 16.06% from 24.68% in April 2025, while also easing month-on-month to 3.63%.
This reflects slower price increases in key staples such as grains, tubers, vegetables, and proteins. Core inflation followed a similar pattern, dropping markedly to 15.86% year-on-year and slowing to 1.03% month-on-month, indicating that underlying price pressures outside food and energy are easing.
At the sub-national level, inflation remained uneven across states, with higher pressures concentrated in northern states such as Sokoto, Bauchi, and Zamfara, while states like Edo, Borno, and Jigawa recorded relatively lower increases.
Food inflation also showed wide disparities, reflecting differences in supply conditions, seasonal harvest effects, and regional demand dynamics.
Overall, while inflation has ticked up slightly in recent months, broader trends suggest that underlying price pressures are softening, particularly in food and core components, even though regional disparities and short-term volatility remain significant Naira Opens Weak, Nigeria’s FX Reserves Signal Uptrend
