The Nigerian secondary bond market ended the week on a bullish note, with average benchmark yields falling by 12 basis points (bps) week-on-week to 15.77 per cent, driven by strong investor demand across most maturing assets.

According to analysts at Cowry Asset Management Limited, sentiment improved remarkably as investors sought refuge in fixed-income instruments amid growing volatility in equities and global markets.

The sustained demand led to a modest yield compression, with the average benchmark yield declining by 12 basis points week-on-week to 15.77 per cent.

Demand was particularly strong in mid- to long-term bonds, reflecting a preference for duration exposure, expectations of relative yield stability, and potential near-term capital gains.

In contrast, the sovereign Eurobond market weakened during the week as cautious sentiment toward emerging market debt weighed on performance.

The average yield on Nigerian Eurobonds rose by 32 basis points to 7.97 per cent, reflecting a re-pricing of risk amid a stronger U.S. dollar and escalating tensions between the United States and Nigerian government.

Investors appeared to price in heightened uncertainty despite Nigeria’s recent success in the international debt market.

Nigeria’s return to the international capital market was nonetheless a resounding success, as the country raised $2.35 billion through a dual-tranche Eurobond issuance that attracted $13 billion in orders, representing a 453 per cent subscription rate.

The issuance comprised $1.25 billion due in 2036 at 8.625 per cent and $1.1 billion due in 2046 at 9.125 per cent, underscoring robust investor confidence in Nigeria’s credit story despite a turbulent global backdrop.

President Bola Tinubu and Finance Minister Wale Edun described the outcome as a strong vote of confidence in the government’s reform-driven economic agenda, while the Debt Management Office (DMO) Director-General, Patience Oniha, hailed it as a strategic milestone in deepening market access and diversifying funding sources.

According to the DMO, proceeds from the issuance will be used to finance the 2025 fiscal deficit and refinance maturing Eurobonds, with listings planned on the London Stock Exchange, FMDQ and the Nigerian Exchange (NGX).

The DMO also emphasised that refinancing through new issuance aligns with global best practices, mirroring recent approaches by Kenya, Cameroon and Angola.

Meanwhile, Nigeria continues diplomatic engagement with the United States to ease emerging frictions over religious freedom and security concerns, a move analysts believed could help sustain foreign investor confidence in the coming months.

Looking ahead, Cowry Asset expects the domestic bond market to sustain its bullish momentum in the near term, supported by steady demand from pension funds, asset managers, and institutional investors seeking safe and predictable returns.

Investors are anticipated to position ahead of the next primary auction, taking advantage of attractive yields along the mid-curve amid expectations of moderated inflation and liquidity support from the Central Bank of Nigeria.

However, Cowry Asset noted that sentiment in the Eurobond segment may remain subdued as global investors adopt a cautious stance in response to tightening global monetary conditions, a stronger dollar and persistent geopolitical tensions.

Consequently, while domestic fixed-income assets are likely to benefit from sustained local inflows, performance in the Eurobond space will hinge on evolving external macroeconomic narratives and broader risk sentiment across emerging markets.

Looking ahead, Cowry Asset Management projects that the domestic bond market will maintain its bullish tone, supported by steady demand from pension funds, asset managers, and institutional investors seeking stable and predictable returns.

Investors are expected to position ahead of the next primary auction, taking advantage of attractive mid-curve yields amid expectations of moderated inflation and liquidity support from the Central Bank.

However, the firm cautioned that the Eurobond segment may remain subdued, as global investors adopt a cautious stance in response to tightening monetary conditions, a stronger dollar, and persistent geopolitical risks.

Cowry Asset Management also added that while domestic fixed-income assets should continue to benefit from robust local inflows, Eurobond performance will depend largely on evolving external macroeconomic conditions and broader risk sentiment across emerging markets.