The average yield on the Federal Government of Nigeria (FGN) bond fell two basis points again in the secondary market. The yield contrasted as investors continued to accumulate naira assets in the secondary market.
The buying trend in the local bond market occurred as investors expected the authority to tighten supply in the primary market. A drop in headline inflation fueled greater demand for bonds in the market.
The most recent disinflationary experience has significantly lowered the negative interest yield or real return earned by fixed interest securities investors in the debt market. Due to the high yield, asset managers and other investors have maintained their bond positions.
Traders said it was a relatively quiet day at the secondary bond market, with some bullish activity noted at the long end of the curve, particularly in the JUN-38 (-60 bps) instrument.
As a result, average yields contracted by 2 bps to settle at 18.75%. In the secondary market, the average yield on FGN bond declined by 0.02%, closing the day at 18.75%, primarily influenced by a significant 60 basis points drop in the yield of the JUN-38 FGN bond.
Across the benchmark curve, the average yield expanded slightly at the short (+1bp) end due to profit taking activities on the JAN-2026 (+1bp) bond, traders said in a note. The yield declined at the long (-7bps) end following demand for the JUN-2038 (-60bps) bond. Meanwhile, the average yield closed flat at the midpoint.
The Debt Management Office (DMO) is expected to conduct a primary market auction, offering N190 billion in FGN bonds across standard maturities this month.
