FGN Bond Yield Falls to 18.4% as Thin Supply Stokes Rally
The average yield on Federal Government of Nigeria (FGN) bond eased by 19 basis points to close the week at 18.4% due to bullish activities in the secondary market, a slew of fixed income market analysts said in separate notes.
The local bond market opened the trading session last week on a quiet note, with minimal activity following the bond auction. The market noticed sporadic trades on the Nigerian bonds maturing in 2029, 2031, 2033, and 2053.
Momentum picked up midweek after the auction results revealed strong demand and lower stop rates of 17.90% and 17.95% for the 2029 and new 2032 papers, respectively—triggering a broad 15–20 bps yield decline across the curve.
Market analysts noted that fixed income market investors’ interest deepened in the newly issued June 2032s and the February 2031s, with improved offers and selective demand.
The Nigerian bond maturing in May 2033 was a focal point throughout the week, AIICO Capital Limited said in an investor note. Towards the close of the trading session last week, market sentiment turned mixed to slightly bearish, yet selective trading persisted.
Bargain hunting in the secondary market deepened after the Debt Management Office (DMO) rejected excess subscriptions at the primary market auction. Hence, investors looked to the secondary market to fill unmet bids, while increased liquidity aided by the inflows from coupon proceeds also supported sentiments.
Consequently, the average yield declined by 19 bps to 18.4%. Across the benchmark curve, the average yield decreased at the short (-18 bps), mid (-2 bps), and long (-13 bps) segments, Cordros Capital Limited said in a note.
The bond yield contraction was driven by demand for the MAR-2027 (-37 bps), FEB-2031 (-33 bps), and JUN-2038 (-90 bps) bonds, respectively. DMO offered instruments worth N100.00 billion to investors through the reopening of the 19.30% FGN APR 2029 and issuance of a new 17.95% FGN JUN 2032 bond.
The total subscriptions level settled at N602.86 billion as against N436.40 billion recorded at the previous auction, with a bid-to-offer ratio of 6.0x from 1.1x. Due to thin supply seen in June, investors are expected to stay cautious while waiting for the third quarter 2025 bond issuance calendar from DMO. #FGN Bond Yield Falls to 18.4% as Thin Supply Stokes Rally Unclaimed Dividends Law Threatens Investors Confidence, Financial Inclusion
