Nigerian Bonds Face Sell Pressure Ahead of N450bn Auction
Benchmark yield on Nigerian government bonds rose to 20.80% due to sell pressures in the secondary market ahead of first supply in 2025. The market anticipates the launch of the first monthly bond auction sales by the Debt Management Office on Monday.
The Debt Office released the January 2025 FGN Bond Offer Circular, announcing a total offer of ₦450 billion across three bond issues. This includes ₦100 billion for the reopened April 2029 bond, N150 billion for the reopened February 2031 bond, and N200 billion for the new January 2035 bond.
With expectation of yield repricing, investors have been trimming their local bond holdings in the secondary market as the inflation rate reduced the real return. On Thursday, bond market sell-offs concentrated at the short end of the curve (+20 bps), with bulls playing at the long end (-8 bps).
But market participants exhibit some high levels of cautious optimism ahead of Monday’s FGN bond auction. Despite the overall subdued atmosphere, there were some trades observed in the mid part of the curve, especially for one of the on-the-run papers, the Feb 2031 paper, AIICO Capital Limited said in a note.
Fixed income analysts noted that only a few transactions took place during the session. Analysts said auctioned bond papers- Apr-29 and February 31—drew the attention of investors eager to seize opportunities ahead of the FGN Bond auction. The demand pushed their yields down by 5bps and 4bps, closing at 20.45% and 22.31%, respectively.
Meanwhile, at the far end of the curve, the Apr-49s became a focal point for market players looking to offload their holdings. Overall, the average benchmark yield declined by 9 basis points to close at 20.80%, CardinalStone Securities Limited said in a note. Investors Take Positions in MTN Nigeria after Tariff Hike
