Debt Office to Open New 7-Year Bonds for Subscription
The Debt Management Office (DMO) is scheduled to conduct its monthly Federal Government (FGN) Bonds auction on June 23, 2025, with one reopening instrument and a new 7-year issue.
Analysts have mixed expectations following the decision of the authority to slash spot rates at the primary market auction conducted last month as the market reacted to disinflation and the monetary policy rate hold decision.
Again, inflation eased, and the financial market is flooded with robust liquidity levels, suggesting demand would be strong. This could inform the DMO to cut spot rates on bonds further amidst limited supply.
At the main auction on Monday, the debt office will open 19.30% FGN APR 2029, which is 5-year reopening bonds worth N50 billion for investors to subscribe to via competitive bids. Another offer worth N50 billion will be the new FGN JUN 2032, which is expected to mature in 7 years.
The thin offer size of ₦100 billion across both instruments, particularly amid limited recent supply of duration, is likely to amplify competitive bidding and drive stop rates lower, AAG Capital Limited said in a note.
Fixed income market analysts said local investors are expected to dominate participation, following this week’s bullish NTB and OMO outcomes. Additionally, the successful Green Bond issuance reinforces confidence in government instruments, setting a positive tone for Monday’s auction.
At the last auction, DMO reduced the spot rate on FGN APR 2029 by 2 basis points, closing at 18.98%. The spot rate on the FGN MAY 2033 bond was reduced to 19.85% from 19.99%.
“At the auction, we expect marginal rates to taper. We reiterate our medium-term expectation of a moderation in bond yields, influenced by two factors—the anticipated dovish monetary policy stance and demand and supply dynamics”, Cordros Capital Limited stated.
In the secondary market, trading activities closed on a bullish note, with investor activity on the short (-10 bps), mid (-4 bps), and long (-6 bps) ends of the curve.
Specifically, the yield on FGN bond maturing in MAR-2026 declined by -39 bps due to increased demand from investors. Also, MAR-2035 FGN bond yield dropped by -15 bps, and JUNE-53 fell by -8 bps, seeing the most change in yields last week.
Consequently, the average yields declined by 7 bps to settle at 18.64%. #Debt Office to Open New 7-Year Bonds for Subscription Oil prices Rise Sharply in 1-Week over Israel, Iran Conflict
