Investors Take Profit on Nigerian Bonds Ahead of Fresh Supply
The average yield on Nigerian government bonds increased by eight basis points, or 8 bps, ahead of fresh supply at the primary market auction on Monday. Bond trading fluctuated in the secondary market while the authorities mopped up N1.2 trillion via OMO and Treasury bills sales.
Trading activities ended on a bearish, though relatively calmer, note, as investors reacted to the higher-than-expected stop rate at the Nigerian Treasury bills auction.Fixed income market analysts saw a mild bearish tone dominating sentiment for most of the week.
Activity was largely concentrated on the mid-curve, particularly local bonds that will mature in 2029, 2031, 2032, and 2033, though overall trading volumes stayed light, AIICO Capital Limited said.
Analysts noted that early sessions were mixed, with slight pressures at the short- to mid-end of the curve, while later in the week bearish offers emerged on benchmark papers such as the 2031, 2032, and 2033, pushing yields higher.
Interest was also noted on the May 2033s and February 2034s, though most trades were isolated. The release of the August 2025 FGN Bond Offer Circular, with N200 billion on offer, kept investors cautious.
Consequently, the average yield expanded by 8 bps to 16.7%. Across the benchmark curve, the average yield increased at the short (+2 bps), mid (+11 bps), and long (+5 bps) segments, driven by sell-offs of the APR-2029 (+42 bps), FEB-2031 (+24 bps), and JUN-2038 (+38 bps) bonds, respectively.
Over the medium term, analysts at Cordros Capital Limited indicate they expect a moderation in bond yields, influenced by the anticipated dovish monetary policy stance and demand and supply dynamics.
The Debt Management Office (DMO) plans to reopen bonds between N80 billion and N100 billion and also launched a new borrowing instrument with the offer size. The authority will sell new Aug 2030 issuance (N100 billion) and the reopening of the Jun 2032 bond (N100 billion) to investors at the primary market, and analysts think upward rates adjustment is potentially limited due to disinflation.
The debt office has been persistent in cutting spot rates on borrowing instruments as part of its efforts to reduce government costs of funding the nation’s budget deficit.Trading is likely to remain cautious as markets await the FGN bond auction and assess liquidity conditions. Transactions Value on Nigerian Exchange Increases by 7.50%
