Bonds Yield Steadies after DMO Auction Underperforms
The average yield on Federal Government of Nigeria (FGN) bond steadied in the secondary market at the beginning of the week after the authority failed to raised N450 billion from auction.
Reflecting investors’ attitude to subdued rates on naira assets in the bonds space, the local FGN bonds market was quiet on Monday, although, with slight sell interest.
Thus, the secondary market for FGN bonds ended the day relatively bearish, as the average mid-yield increased, marginally by 1bp to 18.85%, according to AIICO Capital Limited.
Traders said in their separate market updates that there was yield reduction of 27 basis points in the FEB-34 instrument, and yield expansions of 7bps and 3bps in the MAR25 and JAN-26 FGN instruments.
Last week, Debt Management Office (DMO) offered about ₦450.00 billion but allotted a total of approximately ₦297.00 billion across the 3 tenors – 5 years, 7 years and 10 years bonds.
The total subscription was around ₦305.26 billion, and the total bid to cover ratio was approximately 1.02x. Overall, the local bonds market closed bearish, with the average mid-yield rising by 23 bps to 18.84%.
Given the unimpressive interest exhibited at the market, the stop rates for the 2029, 2031, and 2033 papers were raised, in contrast with DMO financial repression.
According to the auction results, 5Y-FGN Bonds was sold at 19.64%, up by 0.35% from previous auction spot rate. Also, 7-Year FGN Bond was sold at 20.19%, an increase of +0.45% above previous rate offered. Also, 10-Year FGN bonds spot rate was adjusted upward by 1.61% to 21.50%. Banks Seek Higher Short Term Rates on Free Funds
