October 7, 2025/CSL Report

• Domestic bond yields set to decline further on softer inflation outlook and dovish policy stance by the Central Bank of Nigeria (CBN).
• Fixed income investors should extend duration, as bonds at the mid-to-long end of the curve are poised to outperform.
• The equity market rally likely to persist on supportive policy environment, resilient earnings, and investor rotation from fixed income to riskier assets.

Our expectation that yields on domestic government fixed-income instruments would decline in the second half of the year has continued to play out. We reiterate our position (see CSL H2-2025 Outlook: “Between Stabilisation and Strain”, 8 July) that the pivot to an accommodative monetary policy stance by the CBN will accelerate the pace of yield moderation. The key driver behind this trend, in our view, is the anticipated faster slowdown in inflation, which should help anchor interest rate expectations.

This in conjunction with a potential 100 basis points (bps) rate cut by the apex bank next month should help sustain downward pressure on yields over the next three to six months. In the Eurobond market, yields have continued on a downward path, and we maintain a positive outlook for the next six to twelve months. We expect this performance to be aided by the government’s commitment to its reform agenda, the relative stability of the local currency, improving macroeconomic fundamentals, and lower global interest rate environment.

Meanwhile, the equity market has delivered an impressive performance so far this year, posting a year-to-date (YTD) gain of approximately 39.5% as of the end of last week. We maintain our projection that the market could close the year with gains of around 53%, supported by a lower interest rate environment, relative currency stability, resilient corporate earnings, and a likely shift by institutional investors toward equities amid declining yields in the fixed income market.

Kindly click on the below link to download the full report.

​​​CSL Fixed Income and Equity Report – Eyes on the Horizon.pdf​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​