Foreign investors sold Nigeria's sovereign US dollar bonds in the international debt market due to a shift in risk sentiment. The market price of Eurobonds rose, though later moderated slightly amidst seesaw buying, and selling activities in the market. 

Benchmark Yield on Nigeria Bonds Jumps to 15.4%

The average yield on the federal government of Nigeria bond rose slightly on Thursday as investors continued to offload naira assets due to negative yield.

The selloffs, according to some fixed interest securities analysts, were supported by weak liquidity in the financial system.

This was confirmed by a decline in the funding profile in the money market even as the Central Bank of Nigeria (CBN) lifted N2 billion restriction placed on the amount local banks and other authorised dealers can lodge in its Standing Deposit Facility to earn interest.

The liquidity level in the money market has been declining, raising short-term benchmark interest rates. On Thursday, system liquidity remained tight after debit for the CBN open market operation (OMO).

Data from FMDQ showed that key money market rates: the open repo rate and the overnight lending rate, continued to rise, reaching 20.08% (up from 15.92%) and 20.60% (up from 17.13%), respectively.

This happened after the system was debited for the OMO auction conducted on Thursday worth N77.20 billion.  So, in the secondary market, the average yield was unchanged at 12.0% in the OMO segment.

For bonds, the market witnessed pockets of transaction on the sell side. This impacted the yield curve amidst a shift in risk sentiment.  At the close of the session, the average yield expanded by 3bps to 15.4%.

Across the benchmark curve, fixed income analysts said the average yield contracted at the short (-6bps) end. The contraction followed the demand for the MAR-2025 bonds, which then lost 59bps.

However, yield increased at the mid (+10bps) and long (+5bps) segments due to sell-offs of the APR-2029 (+13bps) and MAR-2050 (+51bps) bonds, respectively. # Benchmark Yield on Nigeria Bonds Tick to 15.4% No Shortage of Naira Notes, CBN Assures Nigerians