Yield Rises to 10.44% as DMO Sells Bond
Patience Oniha, DMO Boss

Yield Rises to 10.44% as DMO Sells Bond

The average yield on the Federal Government of Nigeria (FGN) bond jumped 5 basis points in the secondary market to 10.44% as Debt Management Office (DMO auction bond. Largely in 2022, the fixed income market has been on a low beat, relatively as the headline inflation rate widened negative real returns on naira assets.

Yesterday, the DMO offered instruments worth N150.00 billion to investors through re-openings of the 12.50% FGN JAN 2026. The auction was oversubscribed as treasure hunting investors seeking better return take positions.

However, spot rates were priced down, a similar development experienced at the Central Bank of Nigeria (CBN) primary market auctions in the year.

According to the DMO auction result, stop rate on 12.50% FGN JAN 2026 instrument with bid-to-offer printing at 3.1x settled at 10.15%, a 75 basis points decline when compare with the previous rate of10.95%.

Also, 13.00% FGN JAN 2042 with bid-to-offer of 4.9x also decline, stop rate fell 30 basis points to 12.70%, from 13.00%, traders said.

As expected by Cordros Capital traders, demand was strong and higher as the subscription level hits N598.42 billion with a bid-to-offer of 4.0x than February’s auction when the subscription level was N557.72 billion; translating to bid-to-offer of 3.7x.

The DMO eventually over-allotted instruments worth N296.37 billion, resulting in a bid-to-cover ratio of 2.0x. As investors concentrated on primary market auction, activities at the FGN bond secondary market ended on a mixed note. As a result, the average yield climbed by 5 basis points to close at 10.44%.

Across the benchmark curve, the average yield pared at short (-4bps) end as investors demanded the JAN-2026 (-7bps) bond but was unchanged at the mid and long segments, according to Cordros Capital traders note.

Elsewhere, the average yield was flat at 3.6% in the OMO segment. Strained liquidity position was carried forward into the new week, as the average interbank rate was flattish on Monday.

The Open Buy Back & Overnight rates retained their prior positions to close at 9.00% & 9.67%, respectively. In sum, the average interbank rate remained flat to close at 9.34%.

Activities at the Nigerian Treasury Bills secondary market traded on calm to bullish note in today’s session. Consequently, the average rate dropped slightly by 1 basis point to close at 3.22%. READ: Foreign Investors Buy More OMO Bills, Auction to Shape T-Bills Yield

Across the curve, the average yield was unchanged at the short end but contracted slightly at the mid (-1bp) and long (-1bp) segments following buying interests in the 171-day to maturity (-3bps) and 220-day to maturity (-1bp) bills, respectively.

After an emergency was raised at the international debt capital market, trading activities at the FGN Eurobond market was bearish as sell-side pressure was seen across the sovereign curve.

The sell down resulted in 10 basis points jump in the average yield to 7.80%. #Yield Rises to 10.44% as DMO Sells Bond