The Federal Government of Nigeria (FGN) bond market witnessed profit-taking on Tuesday as investors rebalanced their portfolios following the release of new inflation data, which showed a significant decline in consumer prices.
The National Bureau of Statistics reported that the inflation rate fell from 21.88% in July to 20.12% in August, pushing the real interest rate on government bonds to 7.38%. This development has made coupon payments on fixed-income instruments more rewarding in real terms.
Market analysts noted that the widening of real interest rates signals stronger returns after adjusting for inflation. However, the shift in monetary policy expectations has made investors cautious, with many re-evaluating their positions ahead of the September bond issuance.
Trading remained relatively calm in the secondary market, though there was moderate demand for bonds maturing in 2029, 2031, and 2033. The May 2033 bond was quoted at 16.50/16.20%, though wide bid-ask spreads kept transaction volumes limited, according to AIICO Capital Limited.
Cowry Asset Management highlighted that investors are closely assessing the broader implications of macroeconomic indicators on the bond market. As a result, profit-taking in medium- to long-dated bonds pushed the average yield higher by 17 basis points to 16.65%.
Meanwhile, Nigeria’s Eurobond market ended the session on a positive note, with the average yield dropping by 16 basis points to 7.76%, reflecting stronger investor confidence in the country’s external debt instruments.
 bond market witnessed profit-taking on Tuesday as investors rebalanced ...){kind=link}