Benchmark Yield on Nigerian Bonds Falls by 19bps to 18.64%
In the secondary market, the Federal Government of Nigeria (FGN) bonds posted modest gains as stable yields across maturities drove the average sovereign yield down by 19 basis points to 18.64%.
Investors increased their bets on the naira assets ahead of tight auction scheduled for Monday. The Debt Management Office (DMO) will be conduction bonds auction for June next week, where it will offer N100 billion paper across reopening and new issue.
Analysts said it appears the Nigerian government is not looking to fund the 2025 budget deficit with local borrowings. They claim that savings from subsidy removals has eased borrowing demand – in part – raising fiscal performance even with lower than budgeted oil export receipts.
With signal of tight bond supply in 2025, some assets managers and pension funds managers are driving demand via secondary market transaction, and yield has continued to slope downward.
The bullish sentiment was observed across the curve on Thursday, with yield contractions recorded at the short (-15bps), mid (-27bps) and long (-15bps) segments of the curve. Traders reported that yield contraction was driven by investors hunting for the MAR-27 (-52bps), FEB-31 (-47bps) and JAN-42 (-57bps).
“Across the benchmark curve, the average yield contracted at the short (-31bps), mid (-23bps) and long (-15bps) segments, driven by the demand for the MAR-2027 (-52bps), FEB-2031 (-47bps) and JUL-2045 (-57bps) bonds, respectively”, Cordros Capital Limited highlighted in a note.
The Nigerian Treasury bills segment remains largely bullish following yesterday’s midweek auction, which saw significant demand – bid-to-offer ratio of 7.71x. In response to the unmet bids at the auction, demand interest flowed into the secondary market, particularly at the long end (-22bps) of the curve. Average yield eventually closed at 20.42%, reflecting a 15bps decline. Nigeria Boosts Trade Surplus to N5.17trn as Imports Taper
