Bonds Traders Temper Activities Ahead of N7trn Auction in 2025
Trading activities on the Nigerian government bonds tempered in the secondary market as investors anticipated huge bonds supply in 2025.
Yields have been subdued despite inflation and a surge in interest rates, while analysts noted that bonds supply has declined.
The Debt Management Office (DMO) has cutback bonds sales for 2024 by 66.6666%, from offering N360 billion on a monthly basis to N120 billion in supply.
With the year running to a close, the average yield on Federal Government of Nigeria (FGN) bonds has remained at 19.46%, separate analysts said in their notes.
The market anticipates a total of N7.3 trillion in government bond auction sales as part of an effort to finance the 2025 budget deficit.Â
Last week, the domestic bond market saw initial buying interest at the beginning, followed by a cautious approach ahead of the MPC meeting and renewed investor enthusiasm for specific high-yielding securities afterward.
In its note, AIICO Capital Limited analysts notice interest in Apr 2029, Feb 2031, Feb 2034, and Jun 2053 bonds.
“Looking ahead to December, we expect the domestic bond market to post a mildly bearish performance driven by the anticipated inflow worth N216.8 billion from coupon repayment and strategic portfolio realignment ahead of the sizable paper supply by the FG totaling N7.3 trillion in 2025,” Afrinvest Limited said.
On Friday, average benchmark yield remained unchanged but expanded by 5 bps week-on-week, reflecting a bearish sentiment, TrustBanc Financial Group said in a note.
Fixed income market analysts explained in their notes that trading activities started on a quiet note with a bearish tilt as market participants’ exercised caution in anticipation of the outcome of the final MPC meeting for the year.
“However, as the week progressed, the market traded on the sidelines as participants absorbed the 25-bps hike in MPR.
“Most selling activities were concentrated at the short and mid-end of the curve. On a month-on-month basis, the average benchmark yield advanced by 4bps reflecting the prevailing bearish sentiment,” TrustBanc said.
Analysts noted that most of the bearish bias was evident at the mid-end of the curve, due to heavy liquidity constraints witnessed during the month.
The average yield was unchanged at 19.46%, according to CardinalStone Limited, the figure was also supported by Cowry Asset Limited.
In its note, Cordros Capital Limited reported that the average yield expanded at the short (+4bps) and mid (+9bps) segments, following selloffs of the JAN-2026 (+13bps) and JUN-2033 (+53bps) bonds, respectively.
However, fixed income market analysts stated that the average yield closed flat at the long end due to inactivity. “We expect quiet proceedings in the FGN bond secondary market as investors reassess their portfolios and prepare for the last auction of the year.
“Meanwhile, we also maintain our short-term expectation of elevated yields consequent on anticipated monetary policy administration globally and domestically and sustained imbalance in the demand and supply dynamics,” Cordros Capital Limited told investors.  GCR Affirms Tangerine General Insurance Financial Strength Rating of A-(NG)
