SAT AUG 15 2026-theGBJournal| Nigeria’s government bond market came under renewed selling pressure this week as investors switched positions into higher-yielding short-term instruments, pushing average secondary-market yields higher ahead of another potentially busy primary-market calendar.
The average yield across Federal Government of Nigeria (FGN) bonds rose 12 basis points week-on-week to 17.0%, with selling concentrated around the mid-section of the curve as investors unwound positions to participate in the Central Bank of Nigeria’s Open Market Operations (OMO) auction.
The sell-off was broad-based across the benchmark curve. Average yields increased by 42bps at the short end, 5bps in the mid segment and 7bps at the long end, reflecting pressure on selected benchmark securities.
At the short end, the March 2027 bond yield jumped 206bps, while the January 2035 and June 2038 benchmarks rose by 21bps and 38bps, respectively. The sharp move in the 2027 paper suggests investors were particularly active in raising liquidity and reallocating portfolios toward instruments offering more attractive near-term returns.
Borrowing needs keep pressure on yields
The upward movement in bond yields comes against a backdrop of sizeable government borrowing requirements, which are likely to keep fixed-income supply elevated over the medium term.
While stronger participation from both domestic and offshore investors could provide some support for bond prices, the balance between government supply and available liquidity is likely to remain a key determinant of yields.
In the near term, the market could remain volatile as investors position for the DMO’s August 17 bond Primary Market Auction (PMA), at which the Debt Management Office is scheduled to offer N1.10 trillion across selected maturities.
The auction comes at a time when investors are also weighing the prospect of further OMO issuance by the Central Bank of Nigeria (CBN) as the apex bank seeks to absorb excess liquidity from the banking system.
The interaction between the Debt Management Office’s (DMO) bond supply and the CBN’s liquidity-management operations could therefore produce significant portfolio rotation across the fixed-income curve.
For investors, the competing forces are becoming clearer: heavy government supply is putting upward pressure on yields, while strong liquidity and improving demand could limit the extent of the sell-off.
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