FGN Bond Yield Peaks At 16.8% After Under Booked Auction

Following selloffs of bonds due in March 2025, the average yield on the Federal Government of Nigeria (FGN) has increased by 22 basis points to close at 16.80%. The secondary market’s risk-off sentiment after the spike in inflation preceded the upswing.

The ongoing depreciation of the naira’s value has caused investors in the financial industry to grow extremely concerned. According to an update by CardinalStone Partners Limited, given the current 27-year high inflation trajectory, the business believes that Nigeria represents a strong double-digit interest rate environment.

The debt management agency intended to issue FGN bonds to market players in order to raise N2.5 trillion at the most recent auction. In the face of shifting expectations during a period when the market seeks catalysts to drive rates higher due to exposure to inflation conditions.

Still, investment analysts believe that the fixed interest securities market is currently with elevated yield on government borrowing instruments, a level seen a decade ago that resulted in lower lending appetite for banks.

According to traders, the FGN bonds secondary market sustained its bearish sentiments as investors sold off their holdings at the short end (+86bps) of the yield curve. Trading activity was subdued in the secondary market for FGN Bonds, with mild sell-offs in some selected mid and long-dated maturities.

Specifically, the market offloaded the MAR-25 FGN bonds (+392bps) instrument. As a result, average yields increased by 22 basis points to close at 16.80%.

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