Foreign investors invested $3.23 billion in Nigerian bonds during the first quarter of 2026, reflecting growing confidence in the country’s fixed-income market amid attractive interest rates and improved stability in the foreign exchange market.
According to the latest Capital Importation Report released by the National Bureau of Statistics (NBS), bond investments accounted for 32.71 percent of the $9.86 billion portfolio investments recorded during the quarter and represented 31.10 percent of the total $10.37 billion capital inflow into Nigeria.
The inflow marked a significant increase compared to previous periods. Bond investments rose by 267.67 percent from the $877.41 million recorded in the first quarter of 2025 and increased by 63.76 percent from the $1.97 billion attracted in the final quarter of 2025.
Overall capital importation into Nigeria climbed to $10.37 billion in Q1 2026, representing an 83.83 percent increase from the $5.64 billion recorded a year earlier and a 60.97 percent rise from the $6.44 billion reported in the fourth quarter of 2025.
Portfolio investments remained the dominant source of foreign capital, accounting for $9.86 billion or 95.09 percent of total inflows. Within this category, money market instruments attracted the largest share at $6.50 billion, while bonds followed with $3.23 billion. Equity investments contributed a comparatively modest $131.81 million, representing just 1.34 percent of portfolio inflows.
The NBS reported that portfolio investments ranked highest among all investment categories, followed by other investments worth $374.48 million, while foreign direct investment (FDI) remained the lowest at $135.08 million.
Data from the report showed that bonds recorded the strongest growth among portfolio investment instruments. While equity investments rose by 12.34 percent year-on-year and money market investments increased by 54.51 percent, bond inflows surged by more than 267 percent, indicating a strong investor preference for longer-term fixed-income securities.
Analysts attribute the trend to the attractive yields offered by Nigerian government debt instruments following the Central Bank of Nigeria’s aggressive monetary tightening measures over the past two years.
Since taking office in September 2023, CBN Governor Olayemi Cardoso has overseen a series of interest rate hikes that pushed the Monetary Policy Rate from 18.75 percent to a peak of 27.50 percent. The measures were aimed at curbing inflation, stabilising the naira and restoring investor confidence.
After maintaining the benchmark rate for much of 2025, the Monetary Policy Committee began easing monetary policy in September 2025, reducing the MPR to 27 percent before cutting it further to 26.50 percent in early 2026. At its May 2026 meeting, however, the MPC retained the rate at 26.50 percent, citing renewed inflationary pressures linked to developments in global energy markets.
Sectoral analysis showed that the banking industry attracted the largest share of foreign capital at $7.55 billion, representing 72.79 percent of total inflows. The financing sector followed with $2.43 billion, accounting for 23.42 percent.
The United Kingdom emerged as the leading source of capital imports, contributing $5.08 billion or 49.01 percent of total inflows. The United States followed with $3.18 billion, while South Africa accounted for $983.83 million.
The figures suggest that foreign investors are increasingly favouring Nigerian debt securities due to high yields and improved access to foreign exchange, even as foreign direct investment remains relatively weak.
The surge in investor interest coincided with increased government borrowing from the domestic bond market. During the first quarter of 2026, the Federal Government raised N2.69 trillion through bond issuances, supported by strong investor demand.
Debt Management Office auction data showed that investors submitted bids worth N5.88 trillion against bond offers of N2.45 trillion. However, only 45.64 percent of total subscriptions were allotted.
Compared to the first quarter of 2025, when bond allotments stood at N1.94 trillion, government borrowing increased by N750.08 billion, representing a 38.76 percent rise.
Commenting on the development, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, said the inflow of foreign funds into Nigerian bonds highlighted the delicate balance between attracting investment and managing rising debt-servicing obligations.
According to Yusuf, while high interest rates have made Nigerian securities attractive to investors, they have also increased the government’s borrowing costs. He stressed the need for stronger coordination between fiscal and monetary authorities to reduce rates without discouraging investment.
He further advocated greater use of public-private partnerships to finance infrastructure projects, arguing that commercially viable projects should be opened to private investors rather than relying heavily on debt-funded government spending.
Yusuf maintained that such an approach would help ease pressure on public finances while sustaining economic growth and investment inflows.
