Nigeria’s fixed income market sustained a bullish run last week, as robust investor demand for sovereign debt instruments pushed average bond yields down by 19 basis points to 18.38 per cent, from 18.57 per cent recorded in the previous week.
The rally was largely fueled by strong buying interest in longer-dated government bonds. Key instruments such as the JAN-35, MAR-27, and APR-32 saw significant yield compressions of 64 basis points, 39 basis points, and 36 basis points respectively. Analysts attributed the heightened interest to improved system liquidity and easing inflation expectations.
“The market is reacting to a mix of favourable liquidity and a sense that inflation may have peaked in the short term,” said an analyst at a Lagos-based investment firm. “This is encouraging longer-tenor bets.”
Despite the general upbeat sentiment, there was some profit-taking in select papers. The APR-32 and JUN-33 bonds experienced moderate sell pressure, with yields rising by 36 and 13 basis points, respectively — a move market watchers say signals selective positioning by institutional investors ahead of potential monetary policy shifts.
In the primary market, the Debt Management Office (DMO) conducted its June bond auction, offering just ₦100 billion — a sharp drop from the ₦300 billion typically seen in recent months. Nevertheless, investor enthusiasm remained undeterred, as total subscriptions soared to ₦602.86 billion, though only ₦99.99 billion was eventually allotted.
The seven-year tenor bond was the star performer, soaking up 93.09 per cent of total bids, indicating concentrated investor interest in that maturity bracket. The Central Bank of Nigeria (CBN) cleared the auction at stop rates of 17.75 per cent for the APR-29 and 17.95 per cent for the JUN-32, aligning with ongoing secondary market pricing.
The bullish sentiment extended to the Treasury Bills market, where average yields fell by 29 basis points week-on-week to 20.23 per cent. The APR-26, MAY-26, and JAN-26 tenors led the rally, with yield declines of 136, 97, and 86 basis points respectively — a clear sign of investor preference for short-term instruments. However, there were pockets of resistance, with yields ticking up slightly on the NOV-25 (+8 bps) and MAR-26 (+5 bps) papers, following mild profit-taking.
In the Eurobond space, bullish momentum also prevailed, as average yields dropped to 8.61 per cent from 8.97 per cent the previous week. Key movers included the SEP-33 (-45 bps), FEB-32 (-44 bps), and SEP-28 (-39 bps) Eurobonds.
Analysts say the strong foreign investor interest is tied to a broader search for yield amid softening global risk aversion. “Emerging markets are regaining favour, and Nigeria is benefiting from that shift,” one fixed income strategist noted.
With inflation seemingly on a downward trend and global risk appetite improving, analysts anticipate sustained interest in Nigeria’s debt instruments — though volatility may resurface ahead of forthcoming monetary policy decisions.
