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Daniel Adaji
Nigeria’s corporate bond market has fallen to its lowest level in five years, with total issuances declining sharply to ₦87.9 billion in the first half of 2025.
This is according to a recent PricewaterhouseCoopers (PwC)’s Nigerian Capital Market Update accessed by Pointblanknews.com on Friday.
The report attributes the plunge to soaring borrowing costs and high interest rates, which discouraged long-term debt issuance.
PwC noted that the corporate bond market witnessed only two issuances within the period, representing a 33.3 per cent drop compared to 2024, as firms increasingly opted for short-term financing instruments.
“This was largely driven by the steep rise in borrowing costs as issuers shield away from locking in high interest rates over the long-term,” PwC stated.
The firm linked the weak bond activity directly to the Central Bank of Nigeria’s monetary tightening policies, especially after the Monetary Policy Rate (MPR) climbed to an all-time high of 27.50 per cent in late 2024. However, with inflation easing to 22.22 per cent by June 2025, PwC projected that companies might soon “seize the opportunity to issue bonds, potentially leading to a surge in corporate bond activity.”
Nigeria’s corporate bond market forms part of the broader fixed-income segment, which includes Federal Government of Nigeria (FGN) bonds, Sukuk, savings bonds, and green bonds. Historically, corporate bonds have provided a stable funding channel for private companies seeking long-term capital for expansion, infrastructure, or debt refinancing.
Between 2020 and 2024, the market witnessed steady activity, with issuance values oscillating between N312 billion and N688 billion. However, 2025 marks a significant contraction, as the figure slumped to N87.9 billion, its weakest since 2020, when corporate debt issuance totalled N368 billion.
Meanwhile, the FGN bond market also experienced a slowdown, with total issuances declining 24.96 per cent to N4.6 trillion (July 2024–June 2025) from N6.25 trillion in the previous year. PwC attributed this to “high borrowing costs and a more cautious funding strategy amid challenging economic conditions.”
Despite the contraction in traditional corporate bonds, PwC observed a modest expansion in infrastructure debt instruments, as both government and private issuers sought alternative funding to bridge Nigeria’s vast infrastructure gap. “Between July 2024 and June 2025, at least N15.3 billion in infrastructure debt funds and bonds were raised in new and additional issues,” the report said.
The Federal Government also issued N300 billion in Sovereign Sukuk bonds to finance road projects and reintroduced green bonds after a six-year hiatus. In June 2025, N50 billion was issued under the Green Bond Series III, with another N250 billion scheduled for October 2025.
While long-term borrowing weakened, commercial paper issuances surged, reflecting corporates’ preference for shorter tenors amid tighter liquidity. The commercial paper market recorded ₦1.066 trillion raised across 75 issuances in the first half of 2025 — a 70 per cent increase in value despite an 11 per cent dip in volume.
The financial services sector dominated the market, accounting for 62% of total issuance value, followed by manufacturing (27%), agriculture (5%), and fast-moving consumer goods (3%). Access Bank Plc emerged as the top issuer, raising N400 billion, or 38% of total market value.
Corporate bonds in Nigeria are debt securities issued by private or public companies to raise funds from investors for medium to long-term projects. They offer investors fixed returns and are regulated by the Securities and Exchange Commission (SEC), while listings occur on platforms such as the Nigerian Exchange (NGX) and FMDQ Securities Exchange.
Historically, corporate bond issuance in Nigeria gained momentum in the early 2010s following the 2010 SEC rule amendments and the establishment of FMDQ in 2013, which enhanced transparency and secondary market trading. Bonds have since become an important financing tool for infrastructure, energy, and industrial expansion, complementing bank lending and equity markets.