The Nigerian government bond market saw a modest increase in average yields, rising by 5 bps on Wednesday. This was attributed to selloffs on naira-denominated assets following the CBN’s interest rate hike.
Investors reacted to the tighter monetary policy, which raised the benchmark rate to 27.50%. While the hike reduced the negative real return gap in the fixed-income market, inflation still outpaces interest rates by 6.38%.
Bond Market Developments
The bond market witnessed heightened selling activity, particularly in short- and mid-tenure segments. According to Cordros Capital, yields expanded at the short (+1 bps) and mid (+8 bps) sections of the curve, with notable pressure on bonds maturing in January 2026 (+2 bps) and June 2033 (+52 bps). The long-end segment remained flat.
Analysts also observed bearish activity on the FEB-34 FGN bond, which saw its yield rise by 83 bps. Similarly, the JUN-33 FGN bond experienced a yield increase of 52 bps, while the MAY-33 FGN bond rose by 11 bps in the secondary market.
As a result of these trends, the average yield on Nigerian government bonds climbed to 19.45%.
These developments highlight the interplay between inflation, monetary policy adjustments, and investor behavior, shaping the dynamics of Nigeria’s fixed-income market.
