Nigeria’s bond market experienced a surge in activity as investors positioned themselves ahead of the Debt Management Office (DMO) bond auction scheduled for Monday. The increase in demand for government borrowing instruments was fueled by a decline in inflation and a stable benchmark interest rate, making naira assets more attractive.
As a result, trading remained largely positive, with strong interest in specific bonds, including FEB-31, JUL-30, JAN-35, and MAR-35. The demand for the 2035 Federal Government of Nigeria (FGN) bond intensified after the DMO’s auction circular confirmed that 10-year bonds would not be reissued.
Earlier in the week, trading was relatively quiet, with minimal transactions focused on medium-term bonds such as the February 2031 and January 2035 issues. However, sentiment shifted positively when Nigeria released updated inflation figures, prompting investors to seek higher-yielding securities, according to AIICO Capital Limited.
Key bonds targeted by investors included the April 2029, February 2031, and January 2035 maturities, alongside medium-term options such as the May 2033 and June 2038 bonds.
On Friday, the bond market saw a significant rally after the DMO revised its auction plans, reducing the total bond issuance from N450 billion to N350 billion and removing the January 2035 bond from the offer. This move led to a sharp increase in demand for the remaining 2035 bonds.
The DMO plans to issue N350 billion in bonds, divided between April 2029 (N200 billion) and February 2031 (N150 billion). With inflation dropping, investors aggressively sought short- and medium-term bonds, leading to increased trading in the 2029, 2033, and 2035 maturities.
This rush to secure high-yielding bonds caused average yields to drop by 78 basis points, settling at 19.47%.
 bond....){kind=link}