Nigeria Bonds Yield Falls Amidst Widening Real Interest Rate
With mild bargain hunting across the mid, belly, and long end of the curve, the average yield on Federal Government of Nigeria (FGN) bonds fell slightly in the secondary market ahead of Debt Management Office (DMO) fresh supply at the August primary market auction.
Trading activity was largely quiet, albeit with a bullish undertone. Fixed income market traders and analysts at CardinalStone Securities Limited saw selective buying interest at the short end (-1 bp) and mid-segment (-2 bps) of the curve.
Traders reported that investors showed particular interest in Nigerian government bonds maturing in 2026, 2033, and 2034 in the secondary market on Wednesday. The bargain hunting on the local bonds dragged the average yield down by a basis point (1 bp) to print at 16.64% for the session, according to analysts’ notes.
Fixed income securities traders explained that a few offers emerged on the May 2033s at 17.50% and February 2034s at 17.20%, but only isolated deals were completed. Across the benchmark curve, the average yield contracted at the short (-2 bps) and mid (-1 bp) segments due to demand for the JAN-2026 (-9 bps) and JUN-2033 (-5 bps) bonds, respectively. However, bond yield remained unchanged at the long end.
This week, investor sentiment in the fixed income market is likely to lean mixed to bearish as investors react to the higher 1-year NTB stop rate and position cautiously ahead of the FGN bond auction. Nigeria’s debt office will open its August auction for subscription next week, where N80 billion worth of reopening bonds and an additional N80 billion in fresh offers will be made available to investors.
DMO raised bond supply by 100% in August after the authority increased its allotment rate at the previous primary market auction in July. Meanwhile, the rates outlook remains mixed.
Some analysts projected that the spot rate will taper at the auction, noting potential rate repricing as disinflation lifts the real interest rate to 5.62% – benchmark interest rate of 27.5% stayed far ahead of the inflation rate of 21.88%. # Nigeria Bonds Yield Falls Amidst Widening Real Interest Rate Nigeria Exports 663m Metric Tonnes of Products Within ECOWAS in 6 Months
