Investors Rally Nigerian Bonds after Failed Auction Bids
Investors increased Nigerian bond holdings via secondary market transactions after the Debt Management Office (DMO) disappointed yield-seeking asset managers.
The bargain hunting on local bonds papers dragged the benchmark yield on the naira assets in the debt secondary market downward.
Fixed income market analysts said investors are increasing bets on Nigerian bonds as they anticipate the monetary authority will axe rate for the last time in 2025.
The expectation came after sustained disinflation and firmer local currency, though rate is expected to affects banks net interest margin.
Following the buying momentum at the belly and long tenors, the average yields declined 3bps to 15.87% versus 18.02% inflation rate.
Analysts said attractive yield levels in the local debt market will keep the bond market heats up ahead of fresh supply for October, with cautious positioning ahead of monetary policy meeting.
At last week’s bond auction, the Debt Management Office (DMO) offered a total of N260.00bn through reopening the AUG 2030 (5-year) and JUN 2032 (7-year) FGN bonds.
Investor demand remained robust, with subscriptions totalling N1.06trn, representing a bid-to-offer ratio of 4.07x, and stronger interest skewed towards the longer dated bond.
Despite the strong participation, the Debt Office allotted only N313.78bn, translating to a bid-to-cover ratio of 3.37x.
Stop rates moderated by 17 bps and 35 bps to 15.83% p.a. and 15.85% p.a. for the 5-year and 7-year bonds, respectively, suggesting the DMO continues to manage borrowing costs Meta, NDPC Settle $32.8m Data Privacy Fine Out of Court
