The average yield on Federal Government of Nigeria (FGN) bonds climbed on Tuesday as the Debt Management Office (DMO) auction triggered profit-taking and portfolio adjustments. Local bond yields, which have been oscillating below 17% in recent sessions, reflected shifting investor positioning and tight supply conditions.
Yields spiked following heavy sell-offs in bonds maturing in February 2028, March 2027, March 2028, November 2028, April 2029, and November 2029. Post-auction risk-off sentiment pushed the average yield higher by 19 basis points to 16.89%, according to investment banking sources.
Across the curve, yields expanded at the short (+27 bps) and mid (+5 bps) ends, led by a sharp sell-off in the FEB-2028 (+113 bps) and APR-2032 (+19 bps) papers. The long end of the curve, however, remained unchanged.
Analysts noted initial demand for the newly issued 2027, 2029, and February 2031 papers, but yields edged higher later as trading slowed amid wide bid-offer spreads and thin volumes.
The secondary market was largely subdued after the DMO allotted N136.2 billion—well below the N200 billion on offer and short of market expectations based on recent auction trends.
According to CardinalStone Securities Limited, the DMO’s decision to allot below the target may reflect reluctance to cross the 18.00% yield threshold, which could effectively serve as a ceiling in the near term.
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