Benchmark Yield on FGN Bond Falls after DMO Repriced Rate
The average yield on Federal Government of Nigeria (FGN) bond fell in the secondary market as investors sought to fill lost bids at the main auction. Trading activities in the secondary market was influenced by huge lost bids at the primary market auction conducted by the Debt Management Office (DMO) at the beginning of the week.
Local bond yields have been in decline as the market caught a low supply signal from Nigeria’s debt office, reflected in its second-quarter circular. Investors who were unsuccessful placed cards on the table with demand for newly issued naira assets via secondary market transactions.
However, appetite remained cautious given the relatively unattractive coupon, according to CardinalStone Securities Limited, with the bond now trading roughly 30 bps below the auction close.
Fixed income market analysts at the investment firm reported that yields across the mid-curve dipped by 12 bps as they realigned with the auction stop rates. Accordingly, the average yield declined to 18.44%.
Investors seeking to take positions heated up trading activities following a sum of ₦100 billion allotted on the 2029 (19.30%) and new 2032 papers at stop rates of 17.90% and 17.95%, respectively.
This triggered a broad yield decline of 15-20 bps across tenors, closing with average yields down 12 bps. Analysts at AIICO Capital Limited said despite some resistance from investors due to tight liquidity conditions, the market is likely to maintain a mixed-to-bullish tone Okomu Oil, Dangote Drive Intraday Gain in Equities Market
