The Nigerian secondary bond market concluded the week on a strong positive trend, witnessing a significant drop in average benchmark yields as investors shifted funds away from volatile equities into more secure fixed-income instruments.
Domestic Bond Market Sees Bullish Run
Average benchmark yields fell by 12 basis points week-on-week to settle at 15.77 percent, according to market analysis. This notable decline was primarily driven by robust investor appetite across most maturing assets, with particular strength observed in mid- to long-term bonds.
Financial experts at Cowry Asset Management Limited noted that market sentiment improved remarkably as investors sought refuge in fixed-income instruments amid growing volatility in both domestic equities and global markets. The sustained demand resulted in a modest yield compression, reflecting investor preference for duration exposure, expectations of relative yield stability, and potential near-term capital gains.
Eurobond Market Faces Headwinds Despite Successful Issuance
In contrast to the domestic market's performance, the sovereign Eurobond market experienced weakening during the same period. The average yield on Nigerian Eurobonds increased by 32 basis points to reach 7.97 percent, reflecting a re-pricing of risk amid a stronger U.S. dollar and escalating tensions between the United States and Nigerian government.
This cautious sentiment toward emerging market debt emerged despite Nigeria's resounding success in the international capital market. The country raised $2.35 billion through a dual-tranche Eurobond issuance that attracted an overwhelming $13 billion in orders, representing a massive 453 percent subscription rate.
The issuance comprised $1.25 billion due in 2036 at 8.625 percent and $1.1 billion due in 2046 at 9.125 percent, underscoring robust investor confidence in Nigeria's credit story despite a turbulent global backdrop.
Government and Market Outlook
President Bola Tinubu and Finance Minister Wale Edun described the Eurobond outcome as a strong vote of confidence in the government's reform-driven economic agenda. The Debt Management Office (DMO) Director-General, Patience Oniha, hailed it as a strategic milestone in deepening market access and diversifying funding sources.
According to the DMO, proceeds from the issuance will be used to finance the 2025 fiscal deficit and refinance maturing Eurobonds, with listings planned on the London Stock Exchange, FMDQ and the Nigerian Exchange (NGX). The DMO emphasized that this refinancing approach through new issuance aligns with global best practices, mirroring recent strategies adopted by Kenya, Cameroon and Angola.
Meanwhile, Nigeria continues diplomatic engagement with the United States to ease emerging frictions over religious freedom and security concerns, a move analysts believe could help sustain foreign investor confidence in the coming months.
Looking ahead, Cowry Asset expects the domestic bond market to maintain its bullish momentum in the near term, supported by steady demand from pension funds, asset managers, and institutional investors seeking safe and predictable returns. Investors are anticipated to position ahead of the next primary auction, taking advantage of attractive yields along the mid-curve amid expectations of moderated inflation and liquidity support from the Central Bank of Nigeria.
However, the firm cautioned that sentiment in the Eurobond segment may remain subdued as global investors adopt a cautious stance in response to tightening global monetary conditions, a stronger dollar and persistent geopolitical tensions. Consequently, while domestic fixed-income assets are likely to benefit from sustained local inflows, performance in the Eurobond space will hinge on evolving external macroeconomic narratives and broader risk sentiment across emerging markets.
