Market News

By Samuel Mobolaji

Nigeria’s sovereign bond market closed the week on a cautious note, with yields ticking higher as investors repositioned portfolios ahead of a planned N700 billion primary auction by the Debt Management Office.

Average yield on Federal Government bonds rose marginally by 1 basis point week-on-week to 15.94 per cent, reflecting subdued demand in the secondary market as participants adopted a wait-and-see approach.

The DMO is set to re-open three benchmark instruments, the 17.945 per cent FGN Aug 2030, 17.95 per cent FGN Jun 2032, and 22.60 per cent FGN Jan 2035 bonds, in what is expected to be a key test of investor appetite amid tightening liquidity and elevated inflation.

Across the curve, trading patterns showed mild divergence over the week. Short-end yields climbed by 8 basis points, indicating selling pressure and cautious sentiment, while the long end declined by 11 basis points, pointing to selective demand for longer-tenor securities.

Mid-curve instruments came under notable pressure, with the April 2029 bond yield jumping by 48 basis points, reflecting weak demand in that segment. In contrast, the January 2042 maturity saw its yield compress by 52 basis points, suggesting targeted accumulation by investors seeking duration and relatively higher real returns.

Most other maturities traded flat throughout the week, underscoring the defensive posture adopted by market participants as they preserved liquidity ahead of the auction.

Analysts say the slight uptick in yields signals a temporary softening in sentiment rather than a structural shift, with expectations that the primary market will attract strong subscription levels given the relatively attractive yields on offer and limited alternative fixed-income instruments.

With inflation still elevated and monetary conditions tight under the Central Bank of Nigeria, the outcome of the auction is expected to provide clearer direction for yields in the near term and shape broader fixed-income market sentiment.