FGN Bond Yield Hits 16.8% after Under Booked Auction

The average yield on the Federal Government of Nigeria’s (FGN) has inched higher by 22 basis points to settle at 16.80% following selloffs on Mar 2025 bonds. The uptrend came following risk-off appetite in the secondary market following the inflation surge.

The persistent decline in the naira’s value has become a source of major worries for investors in the financial market. In an update, CardinalStone Partners Limited said the firm believes that Nigeria is a strong double-digit interest rate environment, given the current inflation trajectory, which is at a 27-year high.

At the recent auction, the debt management office had planned to raise N2.5 trillion through FGN bond issuance to market participants. The subscription was underbooked amidst changing expectations at a time when the market seeks catalysts to drive rates higher due to exposure to inflation conditions.

Still, investment analysts believe that the fixed interest securities market is currently with elevated yield on government borrowing instruments, a level seen a decade ago that resulted in lower lending appetite for banks.

According to traders, the FGN bonds secondary market sustained its bearish sentiments as investors sold off their holdings at the short end (+86bps) of the yield curve. Trading activity was subdued in the secondary market for FGN Bonds, with mild sell-offs in some selected mid and long-dated maturities.

Specifically, the market offloaded the MAR-25 FGN bonds (+392bps) instrument. As a result, average yields increased by 22 basis points to close at 16.80%. #FGN Bond Yield Hits 16.8% after Under Booked Auction Nigeria to Complete 1999 Constitution Amendment in 2 Years

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