The Nigerian secondary bond market closed the week positively, with average benchmark yields declining by 12 basis points to 15.77 per cent due to strong investor demand. This shift reflects investors seeking safety in fixed-income assets amid volatility in equities and global markets. Meanwhile, the sovereign Eurobond market saw yields rise slightly.
Nigeria's secondary bond market ended the week on a bullish note, as average benchmark yields fell by 12 basis points week-on-week to 15.77 per cent. Analysts at Cowry Asset Management Limited attributed this to improved sentiment, with investors turning to fixed-income instruments for refuge amid growing volatility in equities and global markets. Demand was particularly robust for mid- to long-term bonds, driven by preferences for duration exposure, expectations of yield stability, and potential capital gains.
In contrast, the sovereign Eurobond market experienced weakness, with average yields rising by 32 basis points to 7.97 per cent. This uptick stemmed from cautious investor sentiment toward emerging market debt, influenced by a stronger U.S. dollar and escalating tensions between the United States and the Nigerian government. Despite this, Nigeria's recent Eurobond issuance was a success, raising $2.35 billion through a dual-tranche offering that drew $13 billion in orders—a 453 per cent subscription rate.
The issuance included $1.25 billion due in 2036 at 8.625 per cent and $1.1 billion due in 2046 at 9.125 per cent. President Bola Tinubu and Finance Minister Wale Edun described the outcome as a strong vote of confidence in the government's reform-driven economic agenda. Debt Management Office Director-General Patience Oniha called it a strategic milestone for deepening market access and diversifying funding sources.
Proceeds will 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 noted that this refinancing aligns with global best practices, similar to approaches by Kenya, Cameroon, and Angola. Nigeria is also engaging diplomatically with the U.S. to address frictions over religious freedom and security, potentially bolstering investor confidence.
Looking ahead, Cowry Asset Management expects the domestic bond market to maintain bullish momentum, supported by demand from pension funds and institutional investors ahead of the next primary auction. However, the Eurobond segment may remain subdued due to tightening global monetary conditions, a stronger dollar, and geopolitical risks.