Benchmark Yield on Nigerian Bonds Dips Slightly
The average yield on Nigerian government bonds declined in the secondary market amid cautious trading activities, although investor confidence in local debt instruments remains strong.
Debt market participants were noted to lock in yield in anticipation that an inflation surge would trigger spot rate adjustments.
At the bond auction last month, the Debt Management Office (DMO) offered N700.00 billion across the 5-year, 7-year, and 10-year tenors. Demand recorded at N948.00 billion, a decrease from the previous auction, with investor appetite skewed decisively towards higher duration.
The 10-year paper alone attracted N599.02 billion in subscriptions, reinforcing the ongoing bid for yield at the long end of the curve.
Stop rates on the 5-year and 7-year instruments were marked higher by 30bps and 35bps, respectively, to 16.30% and 16.50%. In contrast, the 10-year cleared 5bps lower at 16.59%, underscoring persistent demand for duration risk
At the close of the trading session on Monday, the average yield eased by 1 bp to 16.08%, signalling renewed domestic investor confidence and strengthening appetite for naira-denominated sovereign debt.
The return on the debt papers remains above inflation, though the recent surge in the consumer price index has reduced the real return on investment.
The market saw tight trading across the curve as investors maintained a cautious stance. Movements were largely mixed, reflecting selective participation and balanced demand-supply dynamics.
At the short end, yields edged higher, led by the 20- Mar-28 (+34bps to 16.18%) and 23-Feb-28 (+2bps to 16.75%), AIICO Capital Limited said in its investor’s note.
The mid-segment saw mild demand with yields on 17-Apr-29, 21-Feb-31, and 27-Apr-32 declining, while the long end was largely flat, with slight buying interest on 21-Jun-38 (-11bps to 15.14%).
Fixed income market analysts said they expect the FGN bond market to trade cautiously on Tuesday as investors continue to digest the outcome of the bond PMA and assess yield direction. Oil Prices Climb, Brent Tops $114 after Iran Attacks UAE
