The Nigerian government, through the Debt Management Office (DMO), is set to auction N300 billion worth of bonds on Monday, aiming to raise funds as part of its N1.8 trillion borrowing plan for the first quarter of 2025. This auction comes against a backdrop of bearish sentiment in the Nigerian government bond secondary market.
According to the DMO’s offer circular, the auction will feature two offerings: a five-year bond maturing in April 2029, yielding 19.3% per annum, and a nine-year bond maturing in May 2033, yielding 19.9% per annum. The DMO has replaced the February 2031 paper with the May 2033 paper, offering N200 billion on the April 2029 paper and N100 billion on the May 2033 paper.
Afrinvest Limited highlighted that this auction is part of the government’s strategy to bridge the fiscal deficit while providing attractive investment opportunities. However, the local bonds market has recently experienced bearish trends, with investors selling off positions, particularly in the MAR-2025 bond ahead of its maturity on March 23.
Throughout the past week, the bond market saw concentrated offers around mid-tenor papers, including the February 2031, May 2033, and February 2034 maturities. Market activity was subdued as investors adopted a cautious stance ahead of the upcoming auction. Traders reported an increase in average yields across the benchmark curve, with significant sell-offs in the MAR-2025, JUN-2033, and JAN-2042 bonds. Overall, the average yield increased by 28 basis points to 18.80%.
This auction will be closely watched by investors seeking to capitalize on the relatively high yields, while also navigating the current market volatility.
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