Nigerian Bonds Yield Declines Ahead of Inflation, Auction
The benchmark yield on Nigerian government bonds eased as optimism over key macroeconomic indicators fueled increased demand for the naira asset in the secondary market.
Investors increased their bets on Nigerian bonds ahead of inflation data for the month of May. In their separate commentary notes, investment firms projected headline inflation to ease further.
Local investors increased demand for bonds ahead of the Debt Management Office (DMO) monthly auction and the release of the consumer price index by the statistics office in the new week.
The bonds market traded on a subdued to moderately active note during the week, with interest largely concentrated in mid-to-long dated maturities, according to fixed interest securities analysts.
The secondary market experienced limited transactions early in the week, though FGN bonds with May 2033 maturity changed hands within the 19.30%–19.40% range.
Trading details revealed that during the midweek session, there was moderate demand, particularly on the new Apr 2029s and Feb 2031s, although offers were scarce.
Toward the end of the week, trading momentum picked up slightly, according to AIICO Capital Limited, as the investment firm reported that there was selective cherry-picking across the curve—especially in Feb 2031s, May 2033s, Jan 2035s, Jul 2045s, and Jun 2053s.
However, wide bid-ask spreads hindered execution. Accordingly, the average yield declined by 1 bp to 18.8%. Analysts said the current mixed-to-bullish sentiment is likely to continue, though market attention remains focused on the upcoming Nigerian Treasury bills auction scheduled for midweek.
Across the benchmark curve, the average yield increased at the short (+2bps) and long (+10bps) ends, driven by selloffs of the FEB-2028 (+4bps) and JUL-2045 (+79bps) bonds, respectively, while it decreased at the mid (-4bps) segment following demand for the JUL-2034 (-24bps) bond. #Nigerian Bonds Yield Decline Ahead of Inflation, Auction#
