FGN Bond Yield Rises To 16.73% As Investors Cut Exposure Ahead Of New Supply

Yields on Federal Government of Nigeria (FGN) bonds edged higher in the secondary market as investors adjusted their portfolios ahead of anticipated fresh supply, pushing the average benchmark yield up by four basis points.

Market activity reflected cautious sentiment as participants reacted to recent repricing at the December primary auction conducted by the Debt Management Office (DMO). At that auction, spot rates on reopened five-year and seven-year FGN bonds were revised upward, setting the tone for subsequent secondary market trading.

The upward movement in bond yields was also influenced by developments in the treasury bills market, where the Central Bank of Nigeria continued to offer higher yields on short-term instruments. This dynamic has encouraged a rotation of funds and reinforced yield pressure across the fixed-income curve.

Selling pressure was particularly evident in the mid-tenor segment, where average yields expanded by 13 basis points. Overall, the benchmark yield climbed to 16.73 percent, up from 16.69 percent in the previous session.

According to AIICO Capital Limited, investor sell-offs were more pronounced in select mid- to long-dated bonds, while activity at the short end of the curve remained relatively subdued. Mild demand was observed for the 22 January 2026 and 20 March 2026 maturities, providing some support at the short end.

Further along the curve, yields widened sharply on the 28 November 2028 and 17 April 2029 bonds, which recorded yield increases of 19 basis points and 29 basis points, respectively, reflecting intensified profit-taking.

Additional weakness emerged in longer-dated instruments, including the 25 June 2032, 15 May 2033, and 21 June 2033 papers, where yields rose by between 28 and 37 basis points. This broad-based repricing contributed to the marginal rise in the overall market average.

Market participants are expected to trade cautiously in the next session as profit-taking persists and investors remain attentive to supply dynamics and evolving interest rate signals.