The Federal Government of Nigeria (FGN) bonds secondary market concluded trading sessions with selloffs as fixed-interest securities dealers built short positions ahead of the Debt Management Office’s (DMO) monthly primary market auction.
According to the debt office bond schedule, the authority will offer investors N200 billion in local borrowing instruments at Monday’s main market auction.
According to investment banking businesses, the authorities will reopen 19.30% FGN APR 2029 bonds and 18.50% FGN FEB 2031 bonds, however the FGN MAY 2033 bond will no longer be issued.
The bond market was mixed to negative, with sideways interest observed in specific maturities, notably April 2029, February 2031, May 2033, March 2050, and June 2053 bonds.
Most traders opened short positions ahead of this month’s bond auction amid the disappointing consumer price index, which surged by +55 basis points to 32.70% year on year, Cordros Capital Limited said in a note.
Due to the decision to trim holdings ahead of the auction and reduce bond supply, the average yield inched higher by 20 basis points to 19.3%.
Across the benchmark curve, the average yield expanded at the short (+35bps), mid (+22bps), and long (+17bps) segments, according to analysts notes.
The yield surge was noted to have been driven by sell pressures from investors taking out profit on the MAR-2025 (+130bps), FEB-2031 (+58bps) bonds, and JUN-2038 (+156bps), respectively.
“We believe the direction of yields in the secondary market will be shaped by the outcome of this month’s FGN bond auction scheduled to hold on Monday,” analysts at Cordros Capital Limited said.
Analysts said the medium-term expectation of elevated yields is contingent on anticipated monetary policy administration globally and domestically and sustained imbalances in the demand and supply dynamics.
