Nigeria’s secondary bond market closed the week with average yields climbing to 15.61 per cent, a clear indication of rising investor caution and sustained bearish sentiment across the fixed-income landscape.
The rise in yields, driven by broad-based sell-offs, underscored the fragility of market confidence as traders and institutional investors continued to recalibrate their portfolios in response to ongoing macroeconomic uncertainty.
Throughout the week, activity remained notably subdued, reflecting a limited appetite for naira-denominated government securities despite volatility across other asset classes.
Trading interest was largely centred around the 2034, 2037 and 2038 maturities, which attracted the most activity and helped to anchor part of the yield curve.
Even so, selective participation in these benchmarks did little to offset the broader upward movement in yields, as investors sought wider risk premiums amid concerns tied to inflation, liquidity pressures, and expectations of tighter monetary conditions.
The upward shift in the average yield signalled that the market remained in a defensive mode, with investors demanding higher returns to compensate for short-term uncertainties.
The week also featured a major auction by the Debt Management Office (DMO), which offered N460 billion in Federal Government of Nigeria bonds, significantly higher than the N260 billion issued at the previous auction.
The supply was evenly distributed between the AUG-2030 and JUN-2032 maturities, each allotted N230 billion. While the auction drew considerable interest, demand did not reach the elevated levels witnessed in the preceding issuance.
Subscriptions totalled N657.26 billion, with the JUN-2032 paper dominating investor preference at N509.39 billion. Ultimately, the DMO allotted N583.52 billion or N589.52 billion, including non-competitive bids, resulting in a bid-to-cover ratio of 1.28 times.
Stop rates edged higher to 15.90 per cent and 16 per cent, respectively, highlighting investors’ desire to secure attractive yields ahead of potential repricing across the curve.
In sharp contrast to the softness in the domestic bond market, Nigeria’s sovereign Eurobonds posted a strong and sustained rally.
The average yield declined by 33 basis points to 7.43 per cent week-on-week, marking a significant boost in investor confidence toward Nigeria’s external debt.
This improvement was supported by favourable macroeconomic developments, including steadying external reserves, improving fiscal signals, and a more constructive outlook from international investors.
The bullish momentum in the Eurobond space underscored a clear divergence between domestic and external investor sentiment, reflecting deeper trust in Nigeria’s global debt instruments.
Looking ahead, analysts at Cowry Research projected that the local secondary bond market would remain under pressure in the near term. According to them, persistent risk aversion among domestic investors is expected to keep yields elevated as market participants navigate uncertainties linked to economic reforms, inflationary trends, and monetary policy shifts.
However, they noted that the Eurobond segment is poised to maintain its upward trajectory, buoyed by continued foreign interest, improving macroeconomic stability, and the expectation that Nigeria’s external debt profile will remain attractive relative to peer markets.
