High Yields in Nigerian Debt Market Attract Global Portfolio Investors

Nigeria’s debt market has emerged as a strong attraction for global portfolio investors as high yields continue to outpace those of most emerging markets.

A Bloomberg index tracking returns on Nigerian local currency bonds has risen 2.6 per cent in September, more than twice the broader emerging market benchmark.

Year-to-date, the index has gained 26.7 per cent, marking the strongest performance since at least 2020.

Investor appetite has been reinforced by a stable naira, supported by stronger oil export earnings and improved foreign exchange inflows.

The local currency closed at ₦1,495.25 per dollar on Monday, its strongest level since February, breaking below the key ₦1,500 threshold.

Nigeria’s current account surplus, recorded at $4.98 billion in the first half of 2025, and rising reserves, now at their highest since November 2021, have also strengthened investor confidence.

Crude oil exports, which accounted for 87 per cent of foreign earnings during the period, provided the bulk of this support.

Charlie Robertson, head of macro strategy at FIM Partners, said Nigeria’s surplus and attractive nominal yields make the naira-denominated market a compelling trade for global funds.

Analysts also believe the Central Bank of Nigeria’s cautious approach to monetary easing will sustain yield differentials and preserve inflows.

The CBN, which has kept its policy rate at 27.5 per cent, is expected to consider a gradual cut in September as inflation shows signs of moderation.

Even with potential easing, yields remain elevated relative to peers, reinforcing Nigeria’s position as one of the most lucrative fixed-income markets for international investors.