Nigeria Priced Local Bonds at Higher Rates, Raised N606 billion

Nigeria Priced Local Bonds at Higher Rates, Raised N606 billion

Nigeria priced local bonds at higher rates across 5-year, 7-year and 10-year maturities at the monthly primary market auction conducted in an efforts to closed 2025 budget funding gap amidst inflation concerns.

The consumer price index peaked at 34.80% in December, and the authority’s inflation fighting has lifted benchmark interest rate to 27.50%. With expectation that inflation rate will increase further in the short-term until base effects set in, Broadstreet expects the Central Bank of Nigeria (CBN) to continue monetary policy tightening in 2025 amidst plan to rebase.

Spot rates on Nigerian bonds climbed as Debt Management Office successfully raised N606 billion from the primary market auction on Monday. According to fixed income market analysts, the Nigeria’s first bonds auction conducted on Monday witnessed significant demand from local investors.

While the DMO offered N450 billion across three maturities: April 2029, February 2031, and a new issue maturing in January 2035, total subscription came in higher at N669.34 billion, surpassing the offer by 49%.

According to analysts note, the local bond that is set to mature in Feb-2031 was oversubscribed by 17%, while bond that is expected to mature in Apr-2029 was undersubscribed by about 7%.

In a note, TrustBanc Financial Group Limited said bid-to-cover came in at 1.49x, higher than 0.78x recorded at the last auction. Taking advantage of increased subscription level, the DMO allotted N606.46 billion, with the Jan- 35 maturity receiving 61% of the total allotment.

Stop rates came in higher across all maturities offered, auction results details revealed.  The Apr29 and Feb-31 bond increased to 21.79% and 22.50%, respectively, from 21.14% and 22.00% recorded at the last auction. 

Also, rate on Nigeria’s newly introduced Jan-35 bond printed at 22.60%.  In light of the recent FGN bond auction results, where the DMO successfully sold N606.46 billion, exceeding the offered size of N450 billion, AIICO Capital Limited said they anticipate a mixed to bearish market activity moving forward Nigerian Exchange Rises by N795bn as Banking, Consumer Stock Rally