Nigeria’s Federal Government bond yields recorded a mild decline in the secondary market on Wednesday, following selective bargain hunting across the short, mid, and long ends of the yield curve. The slight movement came just before the Debt Management Office (DMO) prepares to float fresh bond offerings at the upcoming August primary market auction.
Trading activity remained largely subdued, but analysts described the market sentiment as leaning bullish. Market notes from CardinalStone Securities Limited highlighted that investor demand was noticeable in the short and mid-segments of the curve, where yields fell by 1 basis point (bp) and 2 bps respectively.
According to dealers, the highest buying activity was concentrated on Federal Government bonds maturing in 2026, 2033, and 2034. As a result, the average yield fell by 1 bp to close at 16.64% for the session.
Traders noted that while offers appeared on the May 2033 papers at 17.50% and the February 2034 bonds at 17.20%, only a limited number of trades were executed. Across benchmark instruments, the average yield compressed further in the short (-2 bps) and mid (-1 bp) ends of the curve, largely due to buying interest in the January 2026 (-9 bps) and June 2033 (-5 bps) notes. However, the long end of the market held steady without any significant yield movement.
Looking ahead, analysts expect sentiment in the fixed-income market to be mixed to slightly bearish as investors respond to the recent increase in the one-year Nigerian Treasury Bill (NTB) stop rate and adopt a cautious stance before the DMO’s August bond auction.
The auction, scheduled for next week, will make available N80 billion in reopening bonds and an additional N80 billion in fresh issuance. The DMO doubled its August bond supply after increasing the allotment size in the July auction, indicating stronger supply pressure in the market.
Market watchers also highlighted that Nigeria’s real interest rate — calculated by subtracting inflation from the benchmark interest rate — has expanded. With the Central Bank of Nigeria’s Monetary Policy Rate (MPR) fixed at 27.5% and headline inflation slowing to 21.88%, the real interest rate has improved to 5.62%. This development could influence investor appetite, potentially impacting demand patterns at upcoming auctions.
