Nigeria Bonds Sales Attract Higher Rates
Nigeria offered higher spot rates on the local government monthly bond sales in the primary market, according to auction results conducted by the Debt Management Office (DMO).
Consequently, trading activities in the secondary market ended on a sideway as investors refocused attention amidst higher inflation rate expectations.
At the end of the auction, Nigeria’s debt office raised spot rates on bonds auctioned to investors. Bondholders have been seeking catalysts to drive rates higher amidst accelerating inflation rate conditions in the economy.
The monetary authority’s hawkish stance has also pushed the benchmark interest rate to 18.75%, which is far ahead of the average borrowing rate Nigeria has been paying on mid- and long-dated borrowing instruments.
Though well received amidst tight liquidity in the financial system, spot rates were adjusted higher to compensate for changing market dynamics – weakening naira, high interest and inflation rates.
Spot rates rose by an average of about 1.36ppt across the APR-2029, JUN-2033, JUN-2038 and JUN-2053 papers to 16.0%, 17.0%, 17.5% and 18.0%, respectively, according to CardinalStone.
Traders noted that the Federal Government of Nigeria bonds auction was well subscribed at 1.20x above the offer amount of N360.0 billion.
Analysts’ update showed that sentiments in the FGN bond secondary market were mixed, albeit with a bullish tilt, as the average yield pared by 1bp to 15.67%.
Across the benchmark curve, Cordros Capital Limited told investors that the average yield declined at the short (-3bps) end as investors demanded the JAN-2026 (-13bps) bond but was unchanged at the mid and long segments. Cadbury Nigeria Shrinks Amid 81% Drop in Equity Capital