The average yield on Federal Government of Nigeria (FGN) bonds reached 19.41% in the secondary market last week, following mixed trading sessions and in anticipation of upcoming inflation data.
Bond trading activity remained subdued amid a slowdown in local bond supply. The Debt Management Office (DMO) has halved its monthly bond offerings from N360 billion to N180 billion, leading to oversubscription. Pension funds and banks are placing substantial bets on government debt securities, though returns have been affected by inflation.
With inflation resuming an upward trend, analysts expect further increases throughout the year, primarily due to rising energy prices that are pushing up logistics costs and affecting food prices.
As investors await October inflation data, trading in Nigerian bonds has been mixed, showing fluctuating patterns. Early in the week, trading sentiment was neutral, but it turned bearish after the Open Market Operation (OMO) and Treasury auctions, which saw rising stop rates in the main auction, according to TrustBanc Capital Limited.
Investors showed interest in the Feb 2031, May 2033, Feb 2034, and Jun 2053 bonds, resulting in slight yield movements. Trading was muted overall, but on Friday, the average benchmark yield inched higher amid mild sell-offs driven by risk aversion.
Towards the end of the week, some traders observed modest selling activity in the mid- to long-term bonds, reflecting investors’ response to rising rates and liquidity constraints in the financial system. AIICO Capital Limited noted that buying interest was largely concentrated at the shorter end of the yield curve.
The average benchmark yield remained steady at 18.95% on a week-over-week basis, with expectations that subdued trading will continue into the next week.
 bonds reached 19.41% in the secondary market last week, following mixed trading....){kind=link}