The yield on Nigeria’s Federal Government Bonds (FGN) declined to 16.6% in the secondary market, reflecting strong demand from fixed-income investors positioning ahead of a possible monetary policy easing by the Central Bank of Nigeria.
Investor sentiment has turned bullish on government securities as disinflationary signals and tight supply dynamics bolster optimism. With inflation cooling to 22.22% — down from previous highs — and the Monetary Policy Rate (MPR) maintained at 27.5%, many traders anticipate a near-term reduction in interest rates.
This shift in expectations is prompting investors to secure higher returns by buying bonds at prevailing rates before yields decline further. On Thursday, the FGN bond market recorded modest gains, closing with a positive tone. Market participants observed a general decline in yields across key maturity bands.
According to fixed-income dealers, the average yield across benchmark bonds dipped by 8 basis points to 16.62%. The short end of the yield curve experienced the largest move, dropping by 11 basis points, followed by mid-tenor bonds which shed 9 basis points, while long-duration bonds declined marginally by 2 basis points.
Analysts noted that although buying interest was more visible in short-to-medium term securities, spreads on other maturities remained relatively wide. Of note, bonds maturing in February 2031 traded around a 16.55% yield. Despite the activity, average rates held relatively steady as institutional investors sought to lock in favorable returns.
Market watchers expect bond yields to continue adjusting in line with monetary policy signals, particularly if the Central Bank initiates a cycle of interest rate cuts to stimulate economic activity.
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