There was very little secondary market trading activity for FGN Bonds in the bond market. The average yield, which was just 18.69%, did not increase, hence the interest yield on naira assets remained negative.
Because the Debt Management Office (DMO) intentionally works to maintain spot rates on issuance relative to the monetary authority fairly competitive offers, yields on the Nigerian government have remained muted.
Due to modest sell-offs of the MAR-2025 (+2bps) bond, the market saw a minor increase in yield at the short end (+1bp), but it remained steady at the mid and long segments.
Notwithstanding the rise in the Monetary Policy Rate and other interest rates, real interest rates in Nigeria remain negative. The primary cause of this is inflation, which has been rising and hit a multi-decade high in April.
Prior to the recent hike in Monetary Policy Rate (MPR) in February 2024, rates on government securities increased. Specifically, stop rate for 364-days NTB rose form 7.2% in June 2023 to 16.8% in November 2023 The FGN Bond and Treasury Bills markets experienced a significant rise in yields in 2024.
The average yield in the FGN Bond market increased from 14.13% on the first trading day of the year to 19.29% as of March 26th. But it has since dipped below 19%.
Meanwhile, yields in the Treasury Bills market increased at a much higher rate to 17.67% in March from 6.29% at the beginning of the year. This follows the unprecedented rise in the monetary policy rate, thereby pushing up yields across markets.
