Bonds Yields Spike Ahead of DMO Auction

Bonds Yields Spike Ahead of DMO Auction

The Federal Government of Nigeria (FGN) bonds sustained a bearish sentiment in the secondary market as investors stayed on the sidelines last week. Bonds investors’ action was informed by Debt Management Office (DMO) primary market auction today.

Accordingly, the average yield advanced by 4 basis points to 13.7%. Across the benchmark curve, Cordros Capital said the average yield expanded at the short end by +15 basis points following the sell-offs on the JAN-2026 (+60bps) bond.

However, the yield curve contracted by a basis point at the long end as investors demand the MAR-2050 (-5bps) bond. Meanwhile, the average yield was flat at the mid-segment.

At the bond auction today, the DMO is offering instruments worth N360.00 billion through re-openings of the 13.98% FGN FEB 2028, 12.50% FGN APR 2032, 13.00% FGN JAN 2042 and 12.98% FGN MAR 2050 bonds.

Over the medium term, analysts said they expect an uptick in bond yields as we believe investors will demand higher yields, which will be driven by significant borrowings expected from the FG for the year.

Trading activities showed that it was a quiet close at the FGN bond market, as market players’ position ahead of Monday’s primary market auction. Local investors in the bond market played mostly on the sidelines, as liquidity dearth suppressed buy-side activities across the benchmark curve, TrustBanc Capital said.

Instead, market players exited their short-dated holdings to meet their funding obligations. Notably, Jan-26 (+59bps) and Mar-27 (+49bps) maturities recorded the sharpest jump in yields for the week, according to data from FMDQ.

As a result, the average benchmark yield swelled by 7 basis points to close at 14.33%, week-on-week.

At the Eurobond market, paltry offers registered across the benchmark curve submerged bids at the nearest corner of the curve to close the week on a moderately bearish note.

This week, investors digested macro-economic data released by advanced economies, whilst threading carefully around emerging market sovereign debt environment.

By and large, the average benchmark yield jumped 40 basis points week on week on the back of profit-taking activities, to close at 12.88%. #Bonds Yields Spike Ahead of DMO Auction

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