Nigeria’s bond market saw a rally in the secondary market as investors continued to take positions in naira-denominated assets, driven by optimism around economic stability and fiscal resilience.
Investor appetite for fixed-income securities increased notably, amid expectations of limited bond issuance at the Debt Management Office’s (DMO) monthly auction. The auction’s subscription level fell short of analysts’ projections, and the DMO struggled to meet demand despite offering bonds at lower spot rates.
With headline inflation easing and the Central Bank of Nigeria maintaining its benchmark interest rate at elevated levels, real returns remain attractive. This environment has continued to draw investors—particularly pension fund administrators—into the government bond market, where they remain key participants.
Market analysts noted bullish activity across the fixed-income space on Thursday. Yields held largely steady across the curve, but the average yield on Federal Government of Nigeria (FGN) bonds dipped by 8 basis points to 18.88%.
The rally was most pronounced at the short (-12bps) and mid (-9bps) ends of the yield curve, buoyed by strong demand for specific maturities. The JUL-2030 and FEB-2031 bonds led the charge, with yields falling by 40 and 42 basis points, respectively.
Across the benchmark curve, average yields declined by 15 basis points at the short end and 8 basis points at the mid end. However, the long end of the curve remained unchanged, signaling a more cautious investor stance on longer-term debt.
Analysts say sustained demand and tightening supply conditions could continue to support bond prices in the near term, barring any major shifts in macroeconomic fundamentals or monetary policy.
