The average yield on Nigerian government bonds held steady at 19.73% as trading activity remained subdued in the secondary market. With the Debt Management Office (DMO) concluding bond auctions for the year, local bond supply has temporarily halted.
Looking ahead, over NGN 7 trillion in bond issuance is projected for 2025 to partially finance the budget deficit through local borrowings. On Monday, the Federal Government of Nigeria (FGN) bond market maintained a quiet tone as the average yield stabilized at 19.73%.
Market Performance
Across the benchmark curve, yields inched up by 2 basis points (bps) at the short- and mid-term segments due to moderate sell-offs in naira assets. Investors selectively targeted attractive yields in the mid-to-long-term maturities, with trading concentrated on the April 2029, February 2031, and April 2037 bonds. Despite this focus, trading volumes remained low.
Sell pressure was notable on the January 2026 (+6 bps) and February 2031 (+4 bps) bonds, while yields at the long end of the curve closed flat. Last week, bearish sentiment persisted in the FGN bond market, driven by sell-offs in mid-tenor bonds, such as the April 2029 (+1.45%), May 2029 (+1.29%), and November 2029 (+1.02%).
However, some maturities like June 2033 (-0.32%) and February 2034 (-0.51%) attracted buying interest. This was supported by recent FGN bond coupon inflows and FAAC disbursements, which helped to ease the liquidity deficit in the money market. Consequently, the average yield increased by 21 bps week-on-week to 19.73%.
Auction Highlights
During the last auction, the DMO offered NGN 120 billion worth of instruments through re-openings of the 19.30% April 2029 and 18.50% February 2031 bonds. Strong investor demand resulted in total subscriptions of NGN 278.82 billion, representing a bid-to-offer ratio of 2.32x. The DMO ultimately allotted NGN 211.15 billion across the two tenors.
The stop rate for the April 2029 bond rose by 14 bps to 21.14%, while the February 2031 bond’s rate remained unchanged at 22.00%. Analysts anticipate a mixed to bullish tone in the market this week, buoyed by coupon inflows.
