Yields on Nigerian sovereign bonds continued to decline across all tenors as investor appetite for local currency assets remained strong, driven by dwindling supply expectations and recent interest rate trends. The fixed income market responded positively to projections of a more dovish monetary stance, along with lower debt issuance volumes from the Debt Management Office (DMO) compared to the same period in 2024.
In anticipation of the upcoming inflation report, which analysts expect to reflect continued deceleration following a data rebasing initiative, market sentiment remained bullish. This optimism saw average bond yields decline by 72 basis points to 16.8% last week, according to analysts at Cordros Capital.
The fall in yields was broad-based across maturities. Short-dated bonds shed 71 basis points, mid-tenor instruments lost 92 basis points, while long-term securities slipped 28 basis points. Specific bonds like the JAN-2026, FEB-2031, and APR-2037 experienced yield drops of 161 bps, 120 bps, and 84 bps, respectively, as demand surged in the secondary market.
Further fuelling the rally was the Q3 bond auction calendar released by the DMO, which plans to reopen the APR-2029 and JAN-2032 bonds with an estimated ₦60 billion issuance split between both instruments. Anticipation surrounding these reopenings prompted stronger investor positioning in similar tenors, notably the FEB-2031 and MAY-2033 bonds, where yields dipped by up to 40 basis points.
By midweek, bond investors intensified interest in FEB-2031, JUN-2032, and MAY-2033 papers, sending yields as low as 16.40%. The decline highlights the market’s pivot toward risk-adjusted returns in a macroeconomic environment characterized by cautious optimism.
The week closed with a balanced tone in the fixed income space, reflecting investor recalibration in response to Nigeria’s evolving fiscal outlook, fluctuating global oil prices, and rising geopolitical risks abroad. Market watchers now expect future yield trends to be shaped by potential monetary policy adjustments and external pressures, including trade disputes and international interest rate developments.
Going forward, investor sentiment in the bond market is expected to remain guided by inflation expectations, debt supply metrics, and clarity around the government’s revenue and spending plans, especially concerning oil earnings and fiscal reforms.
