The yield on Federal Government of Nigeria (FGN) bonds dipped slightly as buying interest increased for longer-term securities amidst limited supply. A hike in rates and yields during Q3 2024 spurred investor interest in the fixed-income market, ultimately putting downward pressure on FGN bond yields.
The average yield on FGN bonds reached a high of 20.1% in mid-August but eased to 18.7% by September 27, 2024, as demand picked up. In the secondary market, positive trading activity brought the average yield down marginally to 19.3%.
Investors showed interest in securities maturing in February 2031, May 2033, April 2037, and June 2053, though trading volumes remained limited, leading to a 2-basis-point drop in average mid-yield.
Looking to Q4 2024, FSDH noted that about N1.4 trillion in maturing Treasury Bills and OMO bills could be reinvested, potentially stabilizing yields. However, high government borrowing, which surged 63.9% month-on-month in August, is expected to keep upward pressure on yields. With mixed investor sentiment—some expecting higher yields and others locking in current rates—yields are anticipated to remain elevated, tracking closely with policy rate movements.
