DMO Cuts Nigerian Government Bond Rates as Real Return Widens
The Debt Management Office (DMO) reduced rates on Nigerian Government bonds as the subscription level surpassed the offer size, according to details from auction results obtained.
The DMO cut spot rates across the three offers sharply as the latest decline in Nigeria’s headline inflation rate widened real return on investment in the debt market to 11.07%
The authority conducted a primary market auction of Nigerian bonds, with N1.1 trillion on offer across reopening instruments, as part of efforts to finance the budget deficit.
The auction results showed investors channelled about N17 trillion in investment capital into reopening bonds with the JAN-2035, APR-2037 and JUN-2038 maturities.
The DMO allotted about N805.2 billion as the authority price down spot rate across the reopening local bonds following disinflation.
Reopening bonds with a 2035 expiration were sold to investors at 17.15%, down from 18.34% at the previous auction. The authority sold reopening bonds with a 2037 maturity date at 17.19%, down from 18.35% previously offered to investors.
Also, the spot rate on reopening bonds with a 2038 maturity was reduced to 17.79% from 18.40%, according to details from the August auction results.
With widening real return on investment, Nigeria’s headline inflation rate declined for the second month in a row to 15.43% while the benchmark interest rate was kept at 26.5%.
In the secondary market, trading activity was positive. Traders reported that robust local demand drove bond prices higher and dragged average FGN Bond yields down by 5bps to 16.90%
