Secondary market activity shows rising Nigerian government bond yields following December 3 auctions and year-end liquidity pressures, while short-term Treasury Bills remain mostly stable….
Nigerian government bond yields climbed sharply on Monday, particularly for longer-term securities, as investors demanded higher returns following last week’s Treasury Bill and bond issuances. The trend reflects growing caution among investors and higher borrowing costs for the government.
According to trading data from FMDQ on Monday, December 8, yields on several longer-dated government bonds and bills rose noticeably, marking the first major spike since the Central Bank of Nigeria (CBN) began monetary policy easing in September.
At the December 3, 2025, auctions, the Debt Management Office (DMO) offered a 364-day Treasury Bill at a stop rate of 17.5%, up from 16.04% at previous auctions. This increase suggests borrowing costs for the government are rising, prompting investors to demand higher yields in the secondary market.
Bond Yields Rise Across the Curve
Bond prices fell broadly on Monday, pushing yields upward across most maturities. Key government bonds recorded significant increases:
- March 17 and March 20, 2027: 16.27%, up 0.54% and 0.59%
- Feb. 23 and March 20, 2028: 16.46% and 16.48%, up 0.68% and 0.74%
- April 17 and 26, 2029: 16.70% and 16.71%, the largest jumps of roughly 0.9 percentage points
- Bonds maturing between 2031 and 2032: yields increased by 0.34%–0.60%
Higher yields generally indicate that investors are either selling existing bonds or demanding more return before buying, often reflecting tighter liquidity or expectations of rising interest rates.
Chartered accountant and investment analyst Blakey Ijezie attributed the rise to both the December 3 auctions and year-end spending pressures. “Investors are now pricing in the higher rates set at the last DMO auction,” he said. “As a result, the government will have to pay more to borrow money, and existing bond prices have dropped because investors are demanding higher returns.”
Treasury Bills Mostly Stable, Short-Term Favored
While longer-term bonds and bills rose, yields on short-dated Treasury Bills were largely stable, with minor declines in some cases:
- 8-Jan-2026 T-bill: 15.82%
- 5-Feb-2026: 16.01%
- 9-Apr-2026: 16.25%
However, longer-dated T-bills saw steep increases:
- 3-Sep-2026: 18.86%, up 1.39 points
- 5-Nov-2026: 20.19%, up 1.51 points
- 6-Aug-2026: 18.32%, up 1.09 points
This indicates that investors are increasingly demanding higher returns for locking in funds over extended periods.
Monetary Policy Background
At its 302nd meeting in September, the CBN lowered the Monetary Policy Rate (MPR) from 27.5% to 27%, while narrowing the asymmetric corridor to ±250 basis points. This cautious easing was designed to support liquidity while keeping inflation under control.
In November, the CBN maintained the MPR at 27% during its 303rd meeting, reflecting the central bank’s continued commitment to monetary discipline amid high borrowing costs for businesses and rising inflationary pressures.
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