The Nigerian secondary bond market strengthened last week, buoyed by robust investor demand following the Federal Government’s offering a total of N900 billion across the February 2031, February 2034, and January 2035 FGN bonds in its first monthly bond auction for 2026.

At the primary market auction conducted by the Debt Management Office, the figure represented a sharp increase from the N460 billion offered at the December 2025 auction, underscoring a front-loaded borrowing approach for the first quarter of the year.

Analysts argued that strong liquidity conditions and attractive yield levels drove heavy investor participation, pushing total subscriptions to approximately N2.3 trillion, which translates to a bid-to-cover ratio of 2.5 times, compared with 1.94 times recorded at the previous auction.

From the strong demand pool, the DMO allotted N1.5 trillion, resulting in a sales-to-bid ratio of 1.72 times, significantly higher than the 1.3 times achieved in December.

Investor preference tilted clearly toward medium- to longer-dated maturities. The February 2034 bond attracted the highest interest with N1.0 trillion in subscriptions, of which N576.3 billion was allotted. This was followed closely by the January 2035 bond, which received N731.4 billion in bids and resulted in N570.2 billion being sold. The shorter-dated February 2031 paper also recorded solid demand, drawing N514.0 billion in bids against an offer size of N300 billion, with N398.2 billion allotted.

Non-competitive allotments further boosted total issuance, with N17.5 billion allotted to the February 2031 bond and N113.2 billion to the January 2035 paper.

Stop rates settled firmly within the 17 to 18 per cent band, reflecting sustained appetite for government securities. The February 2031 bond cleared at 17.62 per cent, the February 2034 at 17.50 per cent, while the January 2035 closed at 17.52 per cent.

The outcome highlighted investors’ willingness to lock in yields at current levels amid expectations of stable macroeconomic conditions and continued liquidity support.

Activity in the secondary market mirrored the strength seen at the auction, with yields generally supported by strong domestic demand and reinvestment flows. Market participants largely maintained interest in mid- to long-tenor instruments, reinforcing the positive tone across the local bond curve.

In contrast, Nigeria’s sovereign Eurobond market recorded a softer performance over the week. Average yields on Nigerian Eurobonds rose by about 2 basis points week-on-week to 7.07 per cent, reflecting mild sell-offs by investors amid weakening confidence. The uptick in yields pointed to a more cautious stance by offshore investors, influenced by global risk considerations and close monitoring of Nigeria’s external debt dynamics.

Cowry Asset Management noted that the domestic bond market is expected to remain well supported in the near term, underpinned by strong local demand that could keep yields stable or drive modest declines. However, they cautioned that the sovereign Eurobond market may continue to face upward pressure on yields if external investor sentiment remains fragile, with global developments and Nigeria’s debt management strategy remaining key factors for market direction.