Nigerian Bond Yield Rises as Auction Triggers Reactions
The average yield on Federal Government of Nigeria (FGN) bonds increased as Debt Management Office (DMO) auction results triggered portfolio rebalancing. Local bond yields have been fluctuating below 17%, reflecting the current market perception, investors’ positioning, and tight supply by the authority.
On Tuesday, the yield surged on the back of intense sell-offs in Nigerian local bonds maturing in FEB-2028, MAR-2027, MAR-2028, NOV-2028, APR-2029, and NOV-2029 papers.As a result of the post-auction risk-off sentiment, the average yield expanded by 19 basis points (bps) to 16.89%, according to investment banking firms.
Across the benchmark curve, the average yield expanded at the short (+27 bps) and mid (+5 bps) segments, driven by profit-taking activities on the FEB-2028 (+113 bps) and the APR-2032 (+19 bps) bonds, respectively.
The average yield remained unchanged at the long end. Investment analysts reported that demand emerged for the new bonds maturing in 2027, 2029, and Feb 2031, among others, but yields edged higher later amid wide bid-offer spreads and thin volume.
The secondary bond market trading for the session was largely quiet after the DMO allotted about N136.2 billion in a bond auction, well below the N200.0 billion offered and less than market expectations given recent trends.
The DMO’s decision to allot less could indicate their unwillingness to exceed the 18.00% ceiling, which will then serve as a limit, CardinalStone Securities Limited told investors in a note. # Nigerian Bond Yield Rises as Auction Triggers Reactions; Yields on Naira Assets Mixed, Banks Trim T-Bills Holdings

