There is a growing resurgence in investor interest across Nigeria’s fixed income market, as portfolio managers cautiously increase their positions in government bonds, despite tight liquidity in the financial system.
Speaking during a recent interview with CNBC, Kolawole Komolafe, Treasury Team Lead at Access Bank, explained that investor sentiment is beginning to shift in response to improving macroeconomic indicators and attractive bond yields. According to him, while demand remains measured, there is visible momentum, especially in medium- to long-term government securities.
“We’re observing increased buy-side activity, particularly for bonds with longer tenors,” Komolafe noted. “Although the pace is still cautious, higher bid levels suggest a gradual return of confidence in Nigeria’s sovereign debt instruments.”
Market activity opened the week on a slightly bearish tone, with traders focusing on benchmark bonds such as the FGN 2031 and FGN 2033, which were trading at yields of 16.90% and 16.70%, respectively. The average bid yield across benchmark instruments increased by around 10 basis points, signaling a shift in investor positioning.
Despite the positive signals in the bond space, the money market remains constrained. Komolafe revealed that the system is currently operating on a repo balance of roughly ₦250 billion, with overnight lending rates soaring past 32%—a clear indication of persistent liquidity challenges on the short end of the curve.
Turning to the foreign exchange market, Komolafe acknowledged recent volatility caused by profit-taking from some foreign direct investors (FDIs). However, he credited the Central Bank of Nigeria (CBN) with stabilising the market through timely interventions.
“Earlier this week, the naira appreciated by ₦11 against the dollar, closing at ₦1,518. This improvement was reflected in both the official and Nigerian Autonomous Foreign Exchange (NAFEX) market rates,” he explained.
Although foreign investor demand has moderated somewhat due to recent exits, Komolafe believes interest in Nigerian assets remains fundamentally strong. “What we are witnessing is not a capital flight scenario, but rather strategic portfolio realignments. With continued policy clarity, we anticipate sustained stability in the bond and forex markets,” he added.
Access Bank remains cautiously optimistic in its outlook, supported by ongoing economic reforms and proactive monetary policy management from the CBN. Komolafe concluded that investor interest is likely to strengthen further if the current policy trajectory continues, especially as yields remain attractive and confidence in Nigeria’s economic direction improves.
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