LAGOS, July 20 – Nigeria’s fixed-income market has entered a period of positive real returns, with government securities once again generating yields above the country’s inflation rate following a modest slowdown in consumer price growth.
According to the latest Consumer Price Index (CPI) published by the National Bureau of Statistics (NBS), Nigeria’s headline inflation eased marginally to 15.91% in June 2026, down from 15.93% in May, ending three consecutive months of rising inflation.
The moderation has restored the purchasing power of investors in most sovereign fixed-income instruments after an extended period during which inflation consistently outpaced investment returns.
The improvement has coincided with elevated government borrowing costs, allowing Treasury bills and Federal Government of Nigeria (FGN) bonds to deliver positive inflation-adjusted returns.
At the June FGN bond auction, the January 2035 and April 2037 bonds cleared at marginal rates of 18.34% and 18.35%, respectively. Based on June’s inflation rate, the yields translate into positive real returns of approximately 244 basis points.
Similarly, the 364-day Treasury bill issued at the July 15 auction recorded a stop rate of 17.66%, remaining comfortably above headline inflation.
Retail investors, however, continue to face lower returns through the FGN Savings Bond programme. The latest issue offered a maximum coupon of 15.716%, leaving it marginally below the June inflation rate and resulting in a slightly negative real return.
Commenting on market conditions, Abiodun Ogunniyi, Head of Research at GTI Limited, said Treasury bills currently offer the strongest value among Nigeria’s government-backed fixed-income securities.
According to Ogunniyi, “Among the three instruments, Treasury bills, FGN bonds and Savings Bonds, Treasury bills currently provide the highest return. So, if your objective is to maximise returns within the fixed-income market, Treasury bills offer the best value at the moment.”
He added that the difference becomes even more evident when returns are adjusted for inflation.
“For conventional FGN bonds, the real return is roughly 2% to 2.5%, while Treasury bills offer a real return of about 3% to 3.5%, depending on the tenor. The 364-day Treasury bill is currently yielding around 20% to 21%, making it particularly attractive for investors seeking both competitive returns and relatively short investment horizons,” Ogunniyi said.
The return of positive real yields is expected to improve the attractiveness of Nigeria’s sovereign debt market, particularly for institutional and fixed-income investors seeking to preserve capital while earning returns above inflation. It also reflects the combined impact of moderating price pressures and the government’s relatively high borrowing costs, although sustained positive real returns will depend on the future path of inflation and monetary policy.
