Benchmark Yield on Nigerian Bond Rises, DMO Raises N1.2trn
The benchmark yield on Nigerian government bonds rose by 8 basis points in the secondary market on Monday to 16.42% amid risk-off sentiment following the Debt Management Office’s monthly auction.
Portfolio and asset managers queued at the primary market auction where the Debt Office offered N1.75 trillion in reopening bonds for subscription.
The DMO reopened the FEB-2034, SEP-2036, and JUN-2038 maturities with a total offer size of N1.75 trillion. Total subscription amounted to about N1.75 trillion.
The authority allotted reopened bonds totalling N1.21 trillion at stop rates of 16.99%, 17.29%, and 17.19%, down from 15.50%, 16.79%, and 16.85% at the previous outing.
In its note, Herwood Securities Limited told investors that the secondary market recorded adjustments in offer yields across the auctioned maturities.
The FEB 2034 was quoted at an offer yield of 16.90%, while the SEP 2036 and JUN 2038 were quoted at 17.15% and 17.10%, respectively.
The post-auction quotes reflected lower offer yields than the stop rates on all three instruments, with the 2036 and 2038 maturities showing the more notable differences.
Overall, market activity remained measured as participants assessed the auction results and repriced offers in the secondary market.
Traders reported sell pressure at mid (+9bps) and long (+17bps) segments of the curve. Consequently, average yield expanded by 8bps to 16.42%, CardinalStone Securities Limited said in a note.
The FGN bond market is expected to remain cautious following the October bond auction, as market participants reassess demand across the curve and adjust to the auction stop rates.
Fixed income analysts at Herwood Securities Limited expect attention to remain on the 2036 and 2038 maturities, particularly as investors assess the attractiveness of post-auction offer levels in the 17.10% to 17.15% range.
“We expect selective buying interest, with investors likely to cherry-pick at attractive yield levels rather than engage in aggressive positioning.
“Overall, trading is expected to remain measured as the market adjusts to the auction outcome and awaits further direction from demand and yield movements”, the firm said. DMO to Open N1.75trn Nigerian Govt. Bonds for Subscription
