Benchmark Yield on Nigeria’s Bonds Falls in Post-Auction Rally
Nigerian bonds rallied as investors increased positions after unmet bids at the primary market auction conducted by the Debt Management Office filtered into the secondary market.
The bargain hunting in the secondary market reflected investors’ reaction to the lower stop rates recorded at the Nigeria’s bond primary market auction.
Benchmark yield declined marginally on the back of fixed interest income investor activity seen across the curve but with a focus on the short (-5 bps) and mid-segments (-7 bps) of the curve.
Buying interest in the JAN-26 FGN bonds dragged its yield down by -100 bps, and JAN-35 paper saw a -47bps decline in its yield Consequently, the average yield declined by 4 basis points on Friday. On weekly comparison, average yield reduced by 18 basis points to 18.8%.
The market began the week in a lull while investors awaited the primary market auction. The Debt Management Office (DMO) offered instruments worth N400.00 billion to investors through re-openings of the 19.30% FGN APR 2029.
The total subscription level settled at N436.40 billion as against N495.95 billion at the previous auction, with a bid-to-offer ratio of 1.1x, down from 1.4x recorded previously.
Eventually, the DMO allotted instruments worth N300.69 billion across the two tenors, resulting in a bid-to-cover ratio of 1.5x. Auction results showed that stop rates edged lower to 18.98% (Apr 2029s) and 19.85% (May 2033s).
Unmet demand spilled into secondary trading, driving activity in the 2033s and 2034s, though bids for 2029s remained sparse. The midweek sessions then reverted to quiet trading, with selective interest in the 2029, Feb 2031, May 2033, and Jan 2035 tenors.
By week’s end, limited activity persisted, and the average mid-yield fell 18 bps week on week, while analysts said they expect the market to trade mixed sentiments in the new week.
Across the benchmark curve, the average yield declined at the short (-33 bps), mid (-8 bps), and long (-1 bp) segments. The yield contraction was due to buying interest in the JAN-2026 (-115 bps), FEB-2031 (-42 bps), and APR-2049 (-6 bps) bonds, respectively. #Benchmark Yield on Nigeria’s Bonds Falls in Post-Auction Rally#
