Nigeria’s 10-Year Bond Attracts 20% Interest Rate at DMO Auction

Nigeria’s 10-Year Bond Attracts 20% Interest Rate at DMO Auction

Nigeria’s 10-year bond was sold to investors at 20% at the latest primary market auction conducted by the debt management office on Monday, details from the auction results revealed. Amidst inflation rate concerns, yields across fixed interest securities tenors have remained elevated.

According to data from the statistics office, inflation rate accelerated faster than expected in March, clicking 33.20% year on year – beating investment bankers and Bloomberg projections for the period. Analysts said price levels will get worse given high market prices of goods and service and lower agricultural output.

Price pressures remained prevalent in Nigeria as the March CPI published by the NBS indicated that the headline reading surged by 150bps to 33.2%. Most of the pressures emanated from the food basket, which scaled by 210bps, while the core index increased by 77bps, as per CardinalStone review.

At the bond auction on Monday, the DMO offered N450 billion across standard maturities. Investment firms reported that demand or total subscription was relatively healthy, with a bid-to-offer of 2.04x and a bid-to-cover of 1.47x.

The authority took advantage of the liquidity, allotting N626.82 billion, CardinalStone Securities analysts said in a note.  2029 FGN Bond was sold at 19.30%, 7-year bond was sold at 19.75% and 10-year bonds was priced at 20%.

The oversubscribed auction was supported by healthy liquidity and renewed appetite for naira assets on the hope that Nigeria’s economy will rebound after overhauling. Naira to Appreciate to N1200 vs US Dollar -Goldman Sachs

Transaction was a relatively cold in the bond secondary market as investor shifted attention to monthly auction.  Trading activities ended with sell pressures. Fixed income investors recorded pocket of activities at only the short end of the curve due to selloffs in MAR-2025 (+5bps) and JAN-2026 (+3bps) with the short end of the curve expanding 8bps.

Consequently, the average yield increased by 3bps to close at 19.29%. Elsewhere, the banking index closed negative, shedding 3.83% due to selloffs in all the major banking tickers, GTCO (-7.73%), UBA (-4.94%), ZENITHBANK (-3.38%), ACCESSCORP (-3.89%) and FBNH (-1.29%). The insurance index also closed negative (-0.51%) owing to selloffs in AIICO (-6.25%). All other sectors closed flat.