The benchmark yield on Nigerian government bonds in the secondary market increased to 18.70% following Debt Management Office (DMO) auction sales. Trading activity was rather calm at the start of the week due to the focus moving to N150 billion worth of local bonds for subscription on the main market.
CardinalStone analysts stated in their market note that they noticed sell-side activity on the short end of the curve, which increased the related yield by +13 basis points. Fixed income market analysts highlighted sell pressure on the FEB-28 FGN bond, whose yield increased by 39 basis points.
Demand for bonds in the belly or midpoint of the curve generated a 2 basis point increase in yield. The investing firm reported that there was selling pressure on JUN-33 paper (-6 bps) and FEB-24 FGN bond, whose associated yield dipped by -10 bps.
Overall, the average yield expanded by 5 bps to settle at 18.70%. Across the benchmark curve, the average yield expanded at the short (+29 bps) end. The yield expansion came following the MAR-2025 (102bps) bond selloffs, according to fixed income analysts at Cordros Capital Limited.
However, the yield curve declined slightly at the midpoint (-1 bp) segment due to demand for the JUN-2033 (-6 bp) bond. The average yield closed flat at the long end. Due to the DMO primary market auction, participants shifted their attentions and then focused on the FGN bonds auction.
There were sellers of the May 2033 paper with offers ranging from 20.30% to 20.45%. Overall, the average mid-year closed relatively flat at 18.46%. In a note, analysts at AIICO Capital Limited anticipate a mixed to bearish session on Tuesday, as the DMO sold more than expected on the May 2033 paper despite the stop rate closing significantly lower than the previous auction.
