Riskoff Sentiment on Nigeria Bonds Provokes Yield Surge
The average yield on Nigerian government bonds spiked due to risk off sentiment that follow inflation surge. Bonds supply has eased ahead of 2025 borrowing plan.
The Debt Management Office is expected to open fresh bond auction sales next year as part of efforts to finance Nigeria’s huge budget deficit.
The last auction for the year has been conducted where the authority reopened 5- and 7-year bonds to investors. And it was significantly oversubscribed, though demand appeared to have been tempered as inflation weighted on naira assets.
Further to weak sentiment, trading activities in the bond market was subdued on Thursday as uncertainties in the local economy triggered selloffs.
Some transactions occurred in the mid-to-long-term bonds, especially in the Feb 2031, Feb 2034, and Jun 2053 bonds papers. Across the benchmark curve, the average yield expanded at the short (+23bps) end, according to Cordros Capital Limited.
The surge was driven by sell pressures on the MAR-2025 (+123bps) bond. However, yield closed flat at the mid and long segments, traders said in a note. Moderate offer orders prevailing at the near segment, offset the impact of moderate bids at the belly of the curve, TrustBanc Financial Group said in a report.
Fixed income market analysts said offers submitted for Apr-29 (+3bps) and Feb-31 (+2bps) countered the effect of bids on Jun-38 (-7bps) maturity. Overall, the average yield on FGN bonds expanded by 4bps to print at 19.73%. #Riskoff Sentiment on Nigeria Bonds Provokes Yield Surge#
