Nigerian Bond Market Sees Mild Rally as Yields Fall Across Tenors

Nigeria’s sovereign bond market ended the latest trading session on a modestly positive trajectory, with yields dipping across key maturities, resulting in a notable drop in the average secondary market yield.

Tuesday saw benchmark bond yields drop below the 17% mark, spurred by aggressive buying activity from asset managers and pension fund administrators.

Analysts expect limited supply in the bond market throughout Q3 2025, with the government redirecting its borrowing focus away from the local market. The shift has been attributed to budgetary relief from reduced subsidy spending and improved earnings from crude oil and other exports.

The Debt Management Office’s (DMO) borrowing calendar for the third quarter supports this view, projecting lower issuances. According to analysts, the DMO plans to reopen the Apr-2029 and Jun-2032 bonds with offer sizes ranging between ₦40 billion and ₦60 billion.

As institutional investors ramped up demand, the average yield fell by 18 basis points to 16.94%, as per TrustBanc Financial Group Limited’s data. The prior week had already closed on a bullish note due to positive investor sentiment and speculation that the Central Bank of Nigeria (CBN) could ease monetary policy in the near term.

With inflation beginning to ease, many investors are locking in existing rates ahead of any potential interest rate cuts that may reduce future returns. Analysts say that market direction will largely hinge on inflation trends and demand-supply dynamics in the weeks ahead.