Nigerian Bonds Yield Drops after Auction ‘Surprise’
The average yield on Nigerian government bonds dropped in the secondary market after the Debt Management Office’s surprise allotment at its monthly primary market auction.
The local bonds traded mixed notes with muted activity at the short end and mid-sell pressure in the mid-segment, where few papers saw yields rise. At the long end, a buy bias drove notable yield drops, leaving the average yield to a marginal decline of a basis point on the day.
Traders saw mixed sentiments after the outcome of the Debt Office primary auction, where the authority offered N80 billion for subscription. The lower offer size had been reduced from N100 billion previously supplied, as the market has been experiencing the government’s shift away from local borrowings.
At the auction, the 2032 bond attracted significant interest with N261 billion in bids. Details from the auction results showed marginal rates declined sharply to 15.69% and 15.90%, respectively, while a total of N185.93 billion was allotted in a surprise move—a deviation from the trend established by the Debt Management Office.
In its commentary note, CardinalStone Securities Limited highlighted that the DMO went against the run of play by selling more than what was on offer.
In the first half, the Nigerian government net issued about N3.00 trillion through Treasury bills and FGN Bonds, suggesting that a further net issuance of N10.08 trillion may be required to cover the government’s estimated deficit for 2025, CardinalStone said in a midyear outlook report.
Nigeria mostly relied on the domestic market for deficit financing in the first half of 2025, but analysts said they expect a notable increase in external sourcing in the second half of the year.
Precisely, the Nigerian government has set its sights on raising $1.20 billion through the DMO and a further $2.00 billion at concessionary rates through multilateral sources, according to a midyear outlook report from CardinalStone Limited. #Nigerian Bonds Yield Drops after Auction ‘Surprise’ FAAC Distributes N1.818trn to FG, States, LGs
