By Chibuzor Alli
Nigerian government bond yields climbed to an average of 15.92 per cent last week as investors became more cautious in the secondary market and reduced demand for fixed-income securities.
The average yield on Federal Government of Nigeria bonds rose by 11 basis points week-on-week, according to market analysts.
The weaker demand pushed bond prices lower, which typically results in higher yields as investors adjust their positions across different maturities.
Market participants are also reassessing fixed-income prospects following the Central Bank of Nigeria’s recent 3.5 percentage-point reduction in its benchmark interest rate.
Analysts said the rate cut could put further pressure on fixed-income yields in the coming months, particularly as investors reassess their expectations heading into the fourth quarter.
Meristem Securities said the lower policy rate was likely to influence investors’ expectations for bond yields as the market entered the final quarter of the year.
Inflation trends are also shaping market expectations. Headline inflation fell to 15.39 per cent in August 2026, raising expectations that price pressures could continue to ease.
However, lower inflation can reduce the real returns available to fixed-income investors, making them more selective when deciding which bonds to buy.
Five-Year Bond Yield Climbs as 10-Year Demand Strengthens
Trading was mixed across government bond maturities during the week, reflecting different levels of investor demand.
The yield on the five-year bond increased by 10 basis points to 16.25 per cent as sellers returned to the market.
The 10-year bond moved in the opposite direction, with stronger demand pushing its yield down by six basis points to 15.95 per cent.
Yields on the three-, seven- and 20-year bonds were unchanged at 16.10 per cent, 16.07 per cent and 14.66 per cent respectively.
Despite the weekly increase, bond yields remained significantly above their levels at the start of the year.
Different maturities were trading between 0.68 and 1.04 percentage points above their year-opening levels.
High Yields Could Draw Investors Back
Cowry Asset Management said weak demand could continue to weigh on bond prices and keep yields elevated in the short term.
However, the relatively high yields could eventually make Nigerian government securities more attractive to investors, particularly if liquidity conditions improve.
Investors could also continue to reposition their portfolios across maturities as expectations surrounding interest rates and inflation become clearer.
The direction of bond yields in the coming months is therefore likely to depend on the interaction between monetary policy, inflation trends, liquidity conditions and investor demand.
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