Yields on Nigerian government bonds declined due to heightened demand from investors, particularly in short-to-mid-term bonds. Investors who missed out on the primary market auction are now seeking to build their portfolios through secondary market purchases, driving yields lower.
The surge in demand is largely due to rising interest rates, which now offer better returns, covering inflation risks. Analysts note that for the first time in four years, Nigerian Treasury bills and bonds have moved from an upward-sloping yield curve to a downward trend.
Bond Market Movements
- Key Declining Yields: The short end of the yield curve dropped by 53 basis points (bps), with significant dips in:
- FEB-2028 (-117bps)
- APR-2029 (-59bps)
- MAY-2029 (-57bps)
- Benchmark Bonds: Notable declines were recorded in bonds maturing in April 2029, February 2031, May 2033, February 2034, and January 2035.
- 2031 Bond Performance: This bond fell by 10 bps to close at 18.40%, reflecting strong investor interest.
As a result of the market rally, the average benchmark yield declined by 22 basis points, settling at 18.86%.
Market Outlook
Analysts expect bond yields to remain under pressure as more investors seek to lock in profits. However, the long-term outlook suggests that yields may stabilize as the Central Bank of Nigeria (CBN) adjusts its monetary policy to balance inflation and economic growth.
