Nigeria 10-Year Bonds Rally after Exclusion for Auction
Nigeria’s 10-year bonds tenor attracted investors’ attention in the secondary market following an update from the debt office. Investors have continued to show stronger appetite for long duration naira assets to lock in profit amidst potential policy shift.
In its FGN bond offer circular, Debt Management Office (DMO) announced the removal of the January 2035s from the upcoming auction. Positive real return on investment on naira assets has boosted local investors’ sentiment. Inflation rate dropped significantly while the authority keeps interest rate benchmark elevated at 27.50%.
Signifying deliberate efforts to attract foreign investors’ participation, rates on Nigerian Treasury bills, and bonds auction remained relatively higher.
This inflation protection advantage forced investors to continue to ramp up investment securities with huge subscription of more than N2.41 trillion at the treasury bill auction and N1.632 trillion at the bonds auction despite liquidity squeeze in the banking system.
On Monday, the local bonds market saw subdued activity as investors focused on FGN bond auction, where the DMO offered ₦350 billion.
The auction offer were split between the April 2029 (₦200 billion) and February 2031 (₦150 billion) papers. Despite the subdued activity in the market, modest buying interest was seen at the mid-section of the yield curve.
Demand persisted for the January 2035 paper, though offers were scarce, traders said while mixed interest was noted for the February 2031 and June 2053 papers.
Trades were seen on the short (+2bps) and mid-segment (+8bps) of the curve. In addition, major activity was seen at the long end of the curve, where investors accumulated the JUN-53 paper. Consequently, the average yield expanded by 3bps to 19.51%. #Nigeria 10-Year Bonds Rally after Exclusion for Auction#
