Investors are increasingly buying Nigerian government bonds as they anticipate that an upcoming adjustment to how inflation is calculated could lead to lower interest rates. If inflation figures appear lower after the rebase, the Central Bank of Nigeria (CBN) may decide to cut its benchmark interest rate......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
This move would make borrowing cheaper and encourage economic growth but would also reduce returns on fixed-income investments like bonds and Treasury bills.
With this expectation in mind, investors are moving their funds into government bonds and Treasury bills before any rate cuts occur. On Tuesday, the bond market saw strong buying activity, especially for bonds maturing in the mid-term segment of the yield curve.
This bullish sentiment was especially strong for shorter-term bonds, leading to a 31-basis-point drop in their average yield. Investors heavily bought into bonds maturing in March 2028, March 2026, and January 2026, pushing their yields lower. However, some investors took the opportunity to sell their holdings in longer-term bonds such as those maturing in February 2031 and January 2035, aiming to lock in profits before potential changes in interest rates.
According to Cordros Capital Limited, the overall yield on government bonds declined by 14 basis points to an average of 20.35%. Market analysts attribute this yield drop to the buying interest in January 2026 and April 2032 bonds, while the yield on long-term bonds remained stable.
Experts believe that the market will continue to see strong demand for government bonds in the short term as investors position themselves ahead of the inflation rebase.