The Nigerian government bond secondary market experienced minimal trading activity, with only a few transactions taking place at longer maturities. This was likely due to the upcoming debt office main auction and the release of inflation data from the statistics office.
Despite the heavy demand for short-term borrowing instruments at the primary market on Wednesday, investors still showed increased interest in local bonds. This led to a decline in the benchmark yield. Market participants anticipate that the Debt Management Office will tighten supply in the future.
The DMO is scheduled to conduct its monthly bond sales in September. Additionally, according to their calender, the National Bureau of Statistics is expected to release inflation data for August in mid-September.
The secondary market for Nigerian government bonds witnessed consumer price index, and slowdown in bond issuance by the DMO, driven by factors such as the recent deceleration in inflation to 33.40% from its 2-year peak and the slowdown in bond issuance by the Debt Management Office (DMO), during the last week of July.
Traders reported a surge in buying activity at the long end of the yield curve, with particular interest in the JAN-42 (-24 bps) and JUL-45 (-12 bps) instruments. This buying pressure led to a decline in average yields by a basis point, closing at 18.73%.
According to Cordros Capital Limited’s market update, average yields across the benchmark curve decreased at both the short (-2bps) and long (-4bps) ends. This was primarily due to increased demand for the MAR-2025 (-12bps) and JAN-2042 (-24bps) bonds respectively. However, yields remained unchanged at the mid-segment.
This article was written by Tamaraebiju Jide, a student at Elizade University
