Nigeria’s bond market continued its upward trajectory last week, with strong investor demand for sovereign debt driving average yields down by 19 basis points to 18.38% from 18.57%, according to market data. The bullish momentum reflects improved liquidity and easing inflationary pressures, though selective selling indicates cautious positioning by investors awaiting policy signals.
Strong Demand for Longer-Dated Bonds
The rally was fueled by robust interest in longer-dated Federal Government of Nigeria (FGN) bonds, particularly the JAN-35, MAR-27, and APR-32 maturities, which saw yield declines of 64, 39, and 36 basis points, respectively. Analysts attribute this demand to enhanced market liquidity and growing optimism about stabilizing inflation. However, some bonds, such as the APR-32 and JUN-33, faced selling pressure, with yields rising by 36 and 13 basis points, respectively, reflecting selective profit-taking by institutional investors.
Primary Market Sees High Subscription
In the primary market, the Debt Management Office (DMO) offered N100 billion in FGN bonds during its June 2025 auction, a sharp reduction from the N300 billion offered in prior months. Despite the smaller offer, investor interest remained strong, with subscriptions reaching N602.86 billion. The DMO allotted N99.99 billion, with the seven-year bond attracting 93.09% of total bids. The Central Bank of Nigeria (CBN) set stop rates at 17.75% for the APR-29 bond and 17.95% for the JUN-32 bond, aligning closely with secondary market trends.
Treasury Bills and Eurobonds Follow Bullish Trend
The secondary market for Treasury Bills also exhibited bullish sentiment, with average yields dropping by 29 basis points to 20.23%. Significant yield reductions were recorded for the APR-26 (-136 bps), MAY-26 (-97 bps), and JAN-26 (-86 bps) bills, driven by strong demand for short-term securities. However, mild profit-taking led to yield increases on the NOV-25 (+8 bps) and MAR-26 (+5 bps) papers.
In the Eurobond market, positive sentiment prevailed as average yields fell to 8.61% from 8.97%. Notable declines were seen in the SEP-33 (-45 bps), FEB-32 (-44 bps), and SEP-28 (-39 bps) Eurobonds, as global investors increasingly turned to emerging market assets amid reduced risk aversion.
Market Outlook
The sustained rally in Nigeria’s bond market underscores growing investor confidence, supported by favorable liquidity conditions and expectations of moderating inflation. However, analysts note that selective selling in certain maturities reflects caution ahead of anticipated monetary policy decisions. The strong oversubscription in the primary market and declining yields in both Treasury Bills and Eurobonds signal robust demand for Nigerian debt instruments, positioning the market for continued growth if macroeconomic stability persists.
