Nigerian Bonds Yield Falls after Debt Office’s Tight Supply
Nigerian bond yields fell in the secondary market after the Debt Management Office (DMO) underwrote its monthly auction despite a record excess subscription level.
The lost bids, worth more than N1.1 trillion, filtered into the secondary market as investors continued to show a preference for duration across the naira curve.
The authority’s low allotment suggests a move to tighten supply, forcing asset managers and other investment authorities to flood the secondary market to act. On Tuesday, the average yield on Nigerian bonds fell by 27 bps to 15.76%. While the longer end remained relatively quiet.
Investment firms reported that the short-to-medium-term segments saw active trading, with the 21-Feb-31 (-135bps), 21Feb-34 (-101bps), and 27-Aug-30 (-99bps) instruments attracting strong buying interest.
The 21-Feb-34 bond was particularly active, recording a volume of NGN 63.78 million, Meristem Securities Limited said in a note.
The contraction was driven by selective demand, resulting in notable yield compression across key mid-tenor maturities, while most other benchmarks remained largely stable.
At the short end, yields were broadly unchanged, with all maturities closed flat, reflecting muted activity in the near segment. Across the mid- to long-end, performance was more constructive.
The 21-Feb-31 bond recorded a sharp compression of 135bps to 15.25%, while the 27-Apr-32 and 15-May-33 papers declined by 74bps and 53bps to close at 15.43% and 15.59%, respectively.
The 21-Feb34 maturity also saw a significant decline of 101bps to 15.24%. Elsewhere, longer-dated bonds remained largely unchanged. Overall, the average benchmark yield eased by 19bps to close at 15.73%. Nigerian Bonds Yield Falls after Debt Office’s Tight Supply
