Bond Yields Inch Up as Eurobonds Recover on Renewed Demand

The Nigerian secondary bond market witnessed muted activity last week, with a blend of mild buying interest— particularly at the mid-tenor segment—and selective profit-taking.

These dynamics pushed the average yield slightly higher by 26 basis points to 16.46%, reflecting investor caution amid tight system liquidity and limited primary market triggers.

In contrast, the sovereign Eurobond market experienced a rollercoaster week. Initial trading sessions were marked by broad-based selloffs across the curve, driven by global risk-off sentiment.

However, the bearish momentum was short-lived as foreign and local investors returned midweek to take advantage of higher yields and perceived value across Nigerian sovereign papers.

As a result, average Eurobond yields declined by 18 basis points week-on-week to settle at 8.16%, reflecting renewed demand for high-yield emerging market debt.

Looking into the coming week, market experts anticipate that sentiment in the domestic bond market will remain subdued, saying that investors may stay on the sidelines as the Debt Management Office (DMO) continues to fine-tune bond supply in a bid to manage borrowing costs and stabilize yields.

“Nonetheless, isolated demand at attractive points on the yield curve could spark intermittent rallies. On the Eurobond front, barring any significant risk-off triggers from global markets, such as hawkish surprises from major central banks or geopolitical flare-ups, investor appetite is expected to remain strong,” analysts at Cowry Assets stated.