Nigeria’s market capitalisation declined sharply by N2.53 trillion in early December, driven by a bond sell-off, liquidity pressures, and policy shifts, signalling a turbulent outlook for the country’s fixed-income market.
FMDQ’s reported market capitalisation fell by N2.53 trillion in just two trading days in the first week of December, sliding from N89.52 trillion on Monday December 8 to N86.99 trillion on Tuesday December 9, a 2.82% decline driven almost entirely by a sharp sell‑off in government bonds and a consequent rise in yields.
The broad repricing was concentrated along mid‑ and long‑dated Federal Government of Nigeria (FGN) issues, where investors demanded significantly higher compensation to hold duration. According to the original report, twelve benchmark FGN bonds recorded yield increases on December 9, with several posting double‑digit basis‑point jumps, six were flat and only one registered a negligible positive move. The rapid decline in prices directly erased trillions from the market value of outstanding securities , the primary driver of the N2.53 trillion capitalisation erosion.
Market participants said the shock had two immediate causes. Industry sources described a failed primary market issuance that redirected liquidity into the secondary market, and heavy year‑end cash demands that forced holders to sell into a thin market. Mallam Garba Kurfi, CEO of APT Securities Limited, told reporters: “When the CBN blocked that window, all the money meant for the new issue rushed into the secondary market.” Charles Fakrogha, CEO of Maxfund Africa, added that December’s cash demands prompted desperate selling, amplifying the price collapse and yield surge.
Shorter‑dated instruments showed more resilience. The Treasury‑bill market displayed mixed signals: short‑term OMO bills maturing between January and July 2026 inched up in price with marginal yield falls, while several NT‑bills further out the curve repriced higher as investors sought liquidity and shorter maturities. Money‑market rates remained elevated , the Open Repo rate was reported at 22.50% and the overnight rate at 22.76% , and bond futures for three‑ and six‑month tenors settled lower, signalling expectations of sustained higher yields in the near term.
Analysts cautioned that the move was part of a wider adjustment across Nigeria’s fixed‑income market rather than an isolated structural collapse. Kurfi argued investors were pricing in moderating inflation and interest rates over a medium horizon, saying: “If you lock in a 270‑day instrument today, you can sleep for nine months.” Fakrogha urged calm: “Volatility is the heartbeat of financial markets,” and suggested a clearer trend could emerge within days as liquidity normalises.
Contextual factors beyond the immediate liquidity shock have weighed on investor appetite across the year. Government and market data show corporate bond issuance fell sharply in 2025, with corporate offers declining to multi‑year lows as borrowing costs rose and companies preferred short‑term financing. In October, regulators introduced a 10% withholding tax on interest earned from short‑term securities, a policy change that removed a previously tax‑exempt advantage for many instruments and may have dampened demand for some short‑dated paper; the tax does not apply to interest on federal government bonds, which remain tax‑exempt.
The policy and market backdrop has also featured a shift in trading arrangements and investor strategy. The Central Bank of Nigeria announced plans earlier in the year to migrate trading of some fixed‑income and FX products to an internal platform, a move industry analysts say could reduce volumes and liquidity on external venues if fully implemented. Meanwhile, global and local bank research had been steering investors toward shorter‑dated instruments; Barclays analysts recommended pivoting away from longer‑dated dollar bonds to shorter maturities in May, reflecting a broader preference for the short end of the curve.
The Federal Government of Nigeria’s own debt issuance strategy has also reshaped flows: a high‑coupon 10‑year FGN bond offered earlier in 2025, with a record coupon, attracted strong demand and prompted portfolio switching. Industry data shows that when attractive new issues are available, investors often reallocate from existing paper, a dynamic that can accentuate repricing on secondary markets if new issuance is delayed or blocked.
Market technicians say the December sell‑off should be read against these structural pressures , higher policy rates, technical shifts in trading infrastructure, tax changes and a stretched corporate bond market , which together make liquidity episodes more pronounced. Most analysts interviewed for the original coverage believed yields could stabilise once year‑end liquidity requirements abate and primary issuance windows reopen, but they warned that the timing and scope of any recovery would depend on policy actions and the pace at which cash flows are restored to the market.
- https://nairametrics.com/2025/12/11/fmdq-bonds-erase-n2-53-trillion-in-two-days-as-yields-spike-on-supply-shock-year-end-cash-pressures/ – Please view link – unable to able to access data
- https://nairametrics.com/2025/12/11/fmdq-bonds-erase-n2-53-trillion-in-two-days-as-yields-spike-on-supply-shock-year-end-cash-pressures/ – In early December 2025, Nigeria’s FMDQ securities exchange experienced a significant market capitalisation decline of N2.53 trillion over two trading days, dropping from N89.52 trillion to N86.99 trillion. This 2.82% decrease was primarily driven by a sharp selloff in bond prices, leading to higher yields across benchmark FGN bonds. Experts attributed the selloff to a failed primary market issuance, which flooded the secondary market with excess liquidity, and year-end cash pressures prompting investors to liquidate securities. The market saw broad repricing, especially in mid- and long-dated tenors, with yields increasing across twelve benchmark FGN bonds. Despite the turbulence, analysts suggested that the market was adjusting to supply, liquidity, and expectations ahead of the year’s end, and that yields might stabilise once liquidity normalised.
- https://moneycentral.com.ng/fixed-income-bonds/article/fmdq-faces-67-trading-volume-loss-as-cbn-shifts-to-internal-platform/ – In September 2025, the Central Bank of Nigeria (CBN) announced plans to shift trading of its Fixed Income and Foreign Exchange products to its internal platform, potentially leading to a 67% decline in trading volumes and revenue for the FMDQ Group. This move aims to strengthen market integrity and streamline operations by centralising the trading and settlement processes. The transition is expected to be executed in stages, with full migration targeted for December 1, 2025. The CBN’s initiative reflects a broader strategy to enhance oversight and efficiency in Nigeria’s financial markets.
- https://pointblanknews.com/pbn/news/nigerias-corporate-bonds-drop-to-five-year-low-at-n87-9bn-report/ – In October 2025, Nigeria’s corporate bond market experienced a significant downturn, with total issuances declining to N87.9 billion in the first half of the year, marking the lowest level in five years. This sharp decline is attributed to soaring borrowing costs and high interest rates, which have discouraged long-term debt issuance. The report highlights a 33.3% drop compared to 2024, as companies increasingly opt for short-term financing instruments. The Central Bank of Nigeria’s monetary tightening policies, including raising the Monetary Policy Rate to an all-time high of 27.50% in late 2024, have directly impacted the corporate bond market’s performance.
- https://www.reuters.com/world/africa/nigeria-impose-10-withholding-tax-interest-short-term-securities-2025-10-28/ – In October 2025, Nigeria’s Federal Inland Revenue Service (FIRS) issued a directive mandating a 10% withholding tax on interest earned from short-term securities, including treasury bills, corporate bonds, promissory notes, and bills of exchange. Previously, these instruments were exempt from tax to offer more attractive returns to investors. The new regulation requires banks, stockbrokers, and financial institutions to deduct the tax at the point of payment, with investors able to use the withheld amounts as tax credits unless deemed final taxes. Interest earned on federal government bonds remains tax-exempt. The FIRS emphasised the importance of compliance to avoid penalties, although the expected revenue from this measure remains unclear.
- https://www.thisdaylive.com/2025/05/24/barclays-advises-switch-to-nigerias-shorter-dated-dollar-bonds/ – In May 2025, Barclays analysts recommended that investors shift their focus from Nigeria’s longer-dated dollar bonds to shorter-dated securities, noting that yields in the mid-section of the curve now appear more attractive. The analysts observed that the yield curve has lagged the steepening momentum seen in other emerging markets, where short-dated bonds have rallied more than longer maturities. This suggests that Nigerian shorter-dated securities have the potential to catch up. The recommendation indicates a strategic move to capitalise on more favourable yield opportunities in the shorter end of Nigeria’s bond market.
- https://economicconfidential.com/nigeria-bond-offers-yield/ – In January 2025, Nigeria’s Debt Management Office (DMO) introduced a new 10-year Federal Government of Nigeria (FGN) bond with a coupon rate of 22.60%, the highest yield and coupon rate on record for FGN bonds. The bond attracted significant investor interest, leading to an oversubscription of N368.1 billion compared to the N200 billion offered by the DMO. The high coupon rate provided an attractive yield pick-up, prompting investors to consider switching from existing bonds with lower yields to the new issue. This move reflects the government’s strategy to attract domestic investment and manage its fiscal needs effectively.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The narrative appears to be original, with no identical matches found in recent publications. The earliest known publication date of similar content is December 11, 2025. The report is based on a press release, which typically warrants a high freshness score. However, the absence of earlier coverage may raise questions about the exclusivity of the information. No discrepancies in figures, dates, or quotes were identified.
Quotes check
Score:
9
Notes:
The direct quotes from Mallam Garba Kurfi and Charles Fakrogha appear to be original, with no identical matches found in earlier material. This suggests potentially exclusive content. No variations in wording were noted.
Source reliability
Score:
7
Notes:
The narrative originates from Nairametrics, a financial news platform. While it is a known outlet, it is not as widely recognised as major international media. The report cites statements from reputable individuals, Mallam Garba Kurfi and Charles Fakrogha, whose public profiles can be verified.
Plausability check
Score:
8
Notes:
The claims regarding the N2.53 trillion market capitalisation decline and the factors contributing to the sell-off are plausible and align with known market dynamics. The narrative includes specific details such as bond maturities, interest rates, and policy changes, which enhance its credibility. The language and tone are consistent with financial reporting standards.
Overall assessment
Verdict (FAIL, OPEN, PASS): PASS
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The narrative presents original content with plausible claims and verifiable quotes from reputable individuals. However, the reliance on a single source and the absence of earlier coverage may warrant further verification.