The Nigerian government bond market witnessed persistent selling pressure as portfolio managers engaged in portfolio reshuffling activities across the secondary market.
Analysts noted that the development came in response to reduced spot rates offered to investors in the latest Treasury bills auction conducted by the Central Bank of Nigeria (CBN).
The apex bank trimmed spot rates across various tenors, with the one-year bills closing below the 17% mark. Investors interpreted the downward adjustment as a possible indicator that the Monetary Policy Committee (MPC) could begin easing its policy stance. This speculation follows the recent moderation in inflation, which pushed the real interest rate to 7.38% in August.
Market participants expect headline inflation to continue its downward trajectory into the fourth quarter, supported by the naira’s relative stability, subdued fuel prices, and moderation in food inflation.
Despite this backdrop, the Federal Government bond market traded with a cautious, bearish undertone. New FGN bonds due in 2029, 2031, and 2033 were quoted around 16.30%, 16.25%, and 16.15%, respectively, according to AIICO Capital Limited.
Trading activities, however, remained constrained by wide bid-ask spreads, limiting volumes executed and reinforcing the subdued sentiment observed midweek.
AIICO Capital further reported that the benchmark yield curve slipped by 16 basis points to settle at 16.27%. Market outlook suggests investor sentiment could turn bullish in the near term as participants react to the lower stop rate on the one-year Treasury bill. Abundant liquidity conditions in the system are also expected to lend further support.
Across the yield curve, average returns contracted marginally at the short end (-5 bps), largely due to strong demand for the JAN 2026 bond, which recorded a significant 37 bps decline. However, yields at the mid- and long-term segments held steady.
