Nigeria’s government bonds traded on a stronger note in the secondary market as investors positioned ahead of the Central Bank of Nigeria’s (CBN) upcoming Monetary Policy Committee (MPC) decision on interest rates and in anticipation of September’s bond supply.
Market activity showed significant demand for naira-denominated instruments, particularly across benchmark maturities such as JUN-32 (-59bps), JUL-34 (-43bps), JAN-35 (-34bps), and MAY-33 (-30bps). The mid-segment of the yield curve recorded an average drop of 22 basis points.
Overall, the average yield on government bonds fell by 10 basis points to 16.49%, signaling lower borrowing costs for the government and moderating returns for investors. Analysts attribute the decline to improving macroeconomic fundamentals that have fueled stronger appetite for local assets.
Selective trades were also observed in short-to-mid dated instruments, with notable interest in the 2029 maturity at 16.45% and the 2035 maturity at 16.34%. By the end of last week, the domestic fixed-income market closed bullish, as traders remained cautious but optimistic ahead of the MPC outcome.
According to market reports, the average bond yield dropped 8bps week-on-week to 16.59% due to sustained investor demand. Short-tenor bonds recorded the sharpest drop, sliding 18bps to 16.91% per annum (p.a). Mid-tenor instruments edged slightly higher by 1bp to 16.66% p.a., while long-dated maturities held steady at 15.82% p.a., according to Coronation Merchant Bank Research.
The heaviest buying interest was seen in JAN-2026 (-82bps to 17.74%) and MAR-2026 (-132bps to 17.68%). In the Treasury Bills market, yields broadly declined by 30bps to 18.48% p.a., driven by positive sentiment. Short-term bills fell by 13bps to 17.13% p.a., mid-term tenors by 17bps to 18.39% p.a., and long-term bills by 46bps to 19.28% p.a., with the 3-MAR-2026 bill dropping by 126bps to 19.41% p.a.
In the Open Market Operations (OMO) segment, yields also compressed significantly. Average OMO yields dropped by 103bps to 22.02% p.a., with short-term maturities plunging 206bps to 23.32% p.a., mid-tenors down 129bps to 21.05% p.a., while long-dated maturities moved up 169bps to 21.95% p.a.
Market watchers expect cautious trading to continue this week, with the MPC’s interest rate stance likely to set the tone for further movement in yields.
