Nigeria’s 10-year authorities bond yield rose by 46 foundation factors to 17.05% within the week ended October 16, 2026, even as benchmark yields within the United States, South Africa, Kenya and three different markets declined.
This is based on the Financial Markets Dealers Association (FMDA) weekly market report, which confirmed Nigeria recording the one yield improve amongst seven international locations tracked through the interval.
The upward stress continued on the October 19 Federal Government bond auction, the place the Debt Management Office (DMO) accepted larger cease charges whereas rising its borrowing by aggressive and non-competitive allotments.
Nigeria’s Bond Yield defies international decline:
Nigeria’s benchmark 10-year bond yield elevated from 16.59% to 17.05%, representing a 46-basis-point rise through the assessment week. The motion contrasted with declines throughout all six different markets in FMDA’s comparability.
The United States recorded a 17-basis-point decline in its 10-year yield to five.08%, whereas South Africa’s equal yield fell by 11 foundation factors to eight.86%.
- Kenya’s 10-year yield declined by six foundation factors to 12.53%.
- Japan’s benchmark yield fell by eight foundation factors to 2.94%.
- The United Kingdom recorded a four-basis-point decline to five.40%.
- China’s 10-year yield additionally declined by 4 foundation factors to 1.64%.
- Nigeria’s 10-year yield consequently stood roughly 1,197 foundation factors above the US benchmark, reflecting the substantial distinction in nominal borrowing charges.
- However, the yield hole doesn’t characterize a assured extra return for buyers as a result of it excludes forex actions, inflation and credit score dangers.
- The divergence additionally occurred regardless of a pointy improve in home banking system liquidity.
According to FMDA, banking system liquidity rose by 69.39% to N6.28 trillion, supported by N2.41 trillion in maturing Open Market Operation payments. Average FGN bond yields elevated by 32 foundation factors to 16.43%, whereas common Treasury invoice yields rose by seven foundation factors to 18.23%.
DMO accepts larger Bond Rates:
The October 19 FGN bond auction provided further evidence of upward pressure on authorities borrowing prices. The DMO allotted N1.22 trillion by aggressive bids, roughly 63.5% above the N748.64 billion allotted in September.
An further N800 billion in non-competitive allotments elevated the entire quantity allotted to N2.02 trillion.
- The September 2036 bond’s cease fee elevated by 50 foundation factors to 17.29%.
- The June 2038 bond’s cease fee rose by 34 foundation factors to 17.19%.
- Total public sale subscriptions elevated by roughly 17% in contrast with N1.49 trillion recorded in September.
- The October public sale fashioned a part of a N5.75 trillion fourth-quarter bond issuance programme.
- The larger cease charges point out that the DMO accepted elevated borrowing prices to safe the October allotments.
The improvement adopted similar pressure in the Treasury bill market, where the October 14 auction recorded substantial investor demand however restricted allotments.
At that public sale, the DMO allotted N220 billion from N982.21 billion in subscriptions for the one-year Treasury invoice.
The one-year cease fee elevated to fifteen.90% from 15.85%, representing its first improve since August. The two auctions due to this fact confirmed rising accepted charges throughout totally different segments of the Federal Government securities market.
Liquidity rises amid Bond provide:
The improve in authorities bond yields has implications for buyers holding current fixed-rate securities and these contemplating new purchases. When market yields rise, the costs of current fixed-rate bonds usually fall, doubtlessly creating valuation losses for buyers marking their holdings to market.
- New buyers, nonetheless, might profit from larger obtainable yields when buying authorities securities.
- FMDA reported a 69.39% improve in banking system liquidity to N6.28 trillion through the week ended October 16.
- The CBN recorded a N2.06 trillion primary-market repayment on October 20, offering an extra securities-related liquidity launch.
- Banks subsequently recorded N5.46 trillion in exercise on the CBN’s Standing Lending Facility window.
- The DMO’s fourth-quarter issuance programme consists of deliberate bond auctions of N2 trillion every on November 16 and December 14.
- The newest liquidity actions come as the Federal Government continues to hunt substantial funding from the home bond market.
However, elevated banking system liquidity doesn’t mechanically translate into decrease authorities borrowing prices, as the October public sale demonstrated. The subsequent two scheduled auctions will present additional indications of whether or not DMO is keen to borrow at prevailing larger yields or average the charges.
