Trading in the secondary market for Federal Government of Nigeria (FGN) bonds ended on a mixed note last week, tilting bearish as the Debt Management Office (DMO) signaled a sharp increase in supply.
The DMO announced plans to double the size of bond offers to ₦80 billion each for new and reopening instruments at next week’s auction, reversing its recent pattern of ₦40 billion offers. At the July auction, the debt office had already exceeded initial targets by allotting more securities to investors.
In the secondary market, sentiment turned cautious amid tight system liquidity, resulting in a 16-basis-point rise in average yield to 16.62%. Short- and mid-dated maturities attracted modest demand, while longer-tenor bonds came under selling pressure. Yields on the FGN 2037 and 2038 rose 52 bps and 19 bps to 16.09% and 15.87% respectively, partly offset by a 35-bps drop in the 14.55% FGN 2029 to 16.42%, according to Cowry Asset Management.
Analysts noted that the DMO’s larger-than-expected issuance size and the unveiling of a new 5-year NIGB AUG 2030 bond further pressured mid-curve yields.
Meanwhile, Nigeria’s Eurobond market recorded a mild rally, with broad-based demand driving average yields down by 2 bps to 7.96% week-on-week. Analysts expect the local bond market to remain subdued in the near term, with cautious trading likely to dominate until liquidity improves and new supply enters the system.
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