The benchmark yield on Nigerian government bonds rose by 1 basis point to 19.47% in the secondary market, amid subdued trading activity. Traders observed mild bearish sentiment at the short end of the yield curve, where yields increased by 1 basis point.
As a result, the average yield edged up to 19.47% by the end of the trading day. This shift in yields and the overall quiet trading were attributed to expectations of higher rates in the upcoming Treasury bills auction, coupled with tight system liquidity, according to TrustBanc Capital Limited.
Market participants, adopting a cautious outlook, made slight adjustments to their portfolios, leading to some selling pressure across the yield curve, analysts noted. A majority of trading focused on short- and medium-term bonds. Notably, the Apr-29 and May-33 FGN bond maturities saw sell-offs, with their yields rising by 25 basis points and 10 basis points, respectively, to 20.55% and 20.25%. Analysts expect this modest level of trading activity to persist in the coming days.
The FGN bonds market in October showed mixed sentiment, with a tendency toward bearish trading due to liquidity constraints and a cautious investor outlook, according to AIICO Capital Limited’s update. Early in the month, the market was relatively quiet, focusing on bonds maturing in 2029, 2031, and 2033, with limited activity in other maturities. However, mid-month saw increased bearish pressure, causing yields to rise by 10 to 50 basis points, particularly on long-dated securities.
A key event during the month was the FGN bond auction, where ₦180 billion was offered for the re-opened 2029 and 2031 tenors. The auction attracted strong demand, with total subscriptions reaching ₦389.32 billion and an allotment of ₦289.60 billion. Stop rates surged to 20.75% and 21.70% for the 2029 and 2031 bonds, respectively—marking a 1.75% increase from previous levels. This auction spurred renewed interest in longer-dated bonds, such as the 2031 and 2033 maturities.
As the month drew to a close, the market saw a cautious but somewhat bullish sentiment, particularly for the 2034 and 2053 bonds, as investors repositioned following the primary market auction. Overall, the average yield rose by 56 basis points month-on-month, closing at 19.33%.
