Although investors stayed away last week, the Federal Government of Nigeria (FGN) bonds’ secondary market sentiment remained unfavorable. Today’s Debt Management Office (DMO) main market auction provided information for bond investors.
The average yield thus increased by 4 basis points to 13.7%. After the sell-offs on the JAN-2026 (+60bps) bond, according to Cordros Capital, the average yield at the short end of the benchmark curve increased by +15 basis points.
Yet, when investors flocked to the MAR-2050 (-5bps) bond, the yield curve at the long end shrank by one basis point. The mid-average segment’s yield, meanwhile, remained unchanged. The DMO is providing instruments worth N360.00 billion at the bond auction today by reopening the bonds with interest rates of 13.98% FGN for February 2028, 12.50% FGN for April 2032, 13.00% FGN for January 2042, and 12.98% FGN for March 2050.
Analysts predicted an increase in bond yields over the medium term because they believe investors would demand higher returns, which will be fueled by sizable borrowings anticipated from the FG for the year.
While market participants positioned themselves in front of Monday’s primary market auction, trading activity indicated that the FGN bond market had a calm close. According to TrustBanc Capital, local investors generally stayed out of the bond market as a lack of liquidity stifled buy-side activity throughout the benchmark curve..
In order to fulfill their financing responsibilities, market participants sold their short-dated positions. According to FMDQ statistics, the Jan-26 (+59bps) and Mar-27 (+49bps) maturities had the biggest increases in rates for the week.
The average benchmark yield increased by 7 basis points as a result, closing at 14.33% week over week. To end the week on a modestly pessimistic note, anemic offers posted across the benchmark curve drowned bids in the curve’s closest corner.
Investors studied the macroeconomic news from major nations this week while carefully navigating the sovereign debt landscape in developing markets. By and large, the average benchmark yield jumped 40 basis points week on week on the back of profit-taking activities, to close at 12.88%.
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