Yields on Nigerian government bonds in the secondary market climbed to 19% amid sell-offs that followed recent primary auctions. Market activity reflected a bearish tone, with traders offloading shorter-tenor bonds—indicative of a cautious stance toward longer-duration instruments.
Consequently, average bond yields rose by 2 basis points, closing the week at 19.0%. Analysts at Cordros Capital Limited noted that the increase was most pronounced at the short end of the curve, which jumped by 14 basis points.
The upward pressure on yields was largely driven by a 56-basis-point spike in the JAN-2026 bond. Conversely, yields declined at the mid (-3 bps) and long (-1 bps) ends of the curve, buoyed by buying interest in the FEB-2031 and JUN-2053 bonds, which fell by 15 and 11 basis points respectively.
At last week’s primary auction, the Debt Management Office (DMO) reopened the 19.30% FGN APR 2029 and 18.50% FGN MAY 2033 bonds, offering a total of N350 billion to investors.
The auction attracted bids totaling N495.95 billion—below the N530.31 billion received in the previous round. The bid-to-offer ratio came in at 1.4x, down from 1.8x. Ultimately, the DMO allotted N397.89 billion worth of bonds across both maturities, producing a bid-to-cover ratio of 1.3x. Additionally, non-competitive allotments amounted to N123 billion.
Following the auction, renewed demand emerged for mid-tenor bonds in the secondary market, particularly in the April 2029, February 2031, and May 2033 issues. However, trading volumes remained subdued. Toward the end of the week, interest at the midsection of the curve tapered off again, leading to a decline in average mid-curve yields.
Market analysts foresee a sideways trading pattern in the near term as investors evaluate the latest auction results. Interest in mid- to long-term bonds is expected to persist, though some caution may linger ahead of the forthcoming Monetary Policy Committee (MPC) meeting.
In the medium term, experts anticipate a downward adjustment in bond yields, influenced by a potentially dovish stance from the CBN as well as shifting supply-demand dynamics.
