The average yield on Nigerian government bonds dipped to 18.38% in the secondary market, supported by strong investor demand amid relatively tight supply conditions.
Despite muted trading activity, investor appetite for fixed-income securities remained strong, particularly on the long end of the curve. Recent bond issuances by the Debt Management Office (DMO) reflected a strategic shift toward diversifying funding sources, as the government reduces dependence on local borrowing to bridge fiscal deficits—especially following subsidy removal and persistent oil production shortfalls.
Market performance remained largely stable, with minor selling pressure at the mid-segment (+3 bps) balanced by notable demand at the long end (-4 bps). Bonds such as the JUL-2045 witnessed strong buying, leading to a significant 25 basis point decline in yields, offsetting moderate upticks in bonds like JUL-2030 (+10 bps) and FEB-2031 (+14 bps).
Cordros Capital reported a mixed yield movement across the benchmark curve: short-term (+2 bps), mid-term (+3 bps), and long-term (-4 bps) tenors. Trading interest focused on maturities such as Apr 2029, Feb 2031, and May 2033.
The Federal Government of Nigeria (FGN) bond market closed the previous week on a bullish note, with average yields across all tenors falling by 19 basis points to 18.38%. Short-dated bonds posted the largest yield drops, down 23 basis points to 18.96%, followed by medium- and long-term bonds, which closed at 18.43% and 17.12%, respectively.
Analysts at Coronation Merchant Bank anticipate that the rally in the bond market will persist in the short term, underpinned by declining inflation expectations, a stable naira, and prospects of monetary policy easing.
However, key macroeconomic developments—such as the upcoming GDP report and the July Monetary Policy Committee (MPC) decision—could introduce temporary volatility. In the interim, investors are expected to maintain cautious optimism and favor longer durations to lock in elevated returns before further yield compression occurs.
