By Boluwatife Oshadiya | July 23, 2026
Key Points
- Nigerian government bond yields fell as investors increased demand in the secondary market
- Average FGN bond yield declined six basis points to 17.48%
- Lower inflation and limited bond supply strengthened investor appetite
Main Story
Yields on Nigerian Federal Government bonds declined in the secondary market as investors increased purchases of fixed-income securities, encouraged by improving real returns and reduced bond supply following the Debt Management Office’s (DMO) July bond auction.
Investor sentiment was supported by Nigeria’s headline inflation slowing to 15.91%, while the Central Bank of Nigeria (CBN) maintained the Monetary Policy Rate at 26.5%, widening positive real returns across the domestic fixed-income market.
The average Federal Government bond yield declined by six basis points to 17.48%, reflecting stronger investor demand across the curve. Analysts attributed the rally to reduced bond issuance at the July auction, prompting investors to compete for available securities in the secondary market.
Trading data showed yields fell by 12 basis points at the short end, two basis points in the medium segment and one basis point at the long end of the curve, with the strongest demand concentrated on bonds maturing between 2027 and 2031.
According to Herwood Capital Limited, investor interest remained strongest in the January 2035, April 2037 and June 2038 Federal Government bonds, which initially traded around 18.15% before yields compressed as demand strengthened during the session.
Early transactions were executed on the January 2035 and June 2038 bonds at 18.00% and 18.07%, respectively, before buying pressure pushed yields lower later in the day.
The improved outlook for fixed-income assets also comes as the International Monetary Fund (IMF) projects Nigeria’s economy to expand by 4.1%, reinforcing investor confidence in sovereign debt despite persistent global economic uncertainties.
What’s Being Said
Herwood Capital Limited said investor demand remained concentrated in recently auctioned Federal Government bonds offering relatively attractive yields, with reduced supply supporting stronger secondary market performance.
What’s Next
- Investors will watch the DMO’s next bond auction for indications on supply levels and pricing.
- Market participants are expected to monitor inflation data and future MPC decisions for guidance on interest rate expectations.
- Bond market activity is likely to remain focused on medium-tenor securities offering the most attractive real returns.
Bottom Line: Improving real returns and limited bond supply are strengthening demand for Nigerian government bonds despite elevated interest rates. If inflation continues to moderate and the CBN maintains its current policy stance, bond yields could remain on a gradual downward trajectory.
