Yields on Nigerian government bonds declined in the past week as strong investor demand in the secondary market followed unmet bids at the latest primary auction conducted by the Debt Management Office (DMO).
The bullish sentiment emerged after the DMO auction recorded lower stop rates, sparking a buying spree among fixed-income investors seeking better yields in the secondary space. Benchmark bond yields dipped slightly across the curve, particularly in the short (-5 basis points) and mid-segments (-7 basis points), according to data released Friday.
Significant activity was observed in the FGN JAN-2026 bond, which recorded a steep 100 basis-point drop in yield, while the JAN-2035 paper saw a 47 basis-point decline. These movements drove the average yield lower by 4 basis points on the day and by 18 basis points on a week-on-week basis, settling at 18.8%.
At the DMO’s recent auction, the government re-opened the 19.30% FGN APR 2029 bond, offering ₦400 billion. Total bids reached ₦436.40 billion, slightly below the ₦495.95 billion in the previous session, and the bid-to-offer ratio dropped to 1.1x from 1.4x.
Ultimately, the DMO allotted ₦300.69 billion worth of bonds, resulting in a bid-to-cover ratio of 1.5x. Stop rates declined to 18.98% for APR 2029 and 19.85% for MAY 2033.
Unsuccessful bids spilled into secondary trading, with elevated interest in 2033s and 2034s. However, demand for 2029 maturities remained subdued. The midweek trading session saw selective activity, focusing on FEB 2031, MAY 2033, and JAN 2035 bonds.
Despite quieter activity toward the weekend, the average yield across benchmark tenors dropped 18 basis points week over week. The short end of the curve saw the steepest decline at 33 basis points, followed by 8 basis points in the mid-segment and a marginal 1 basis point dip in the long-term zone.
Yield contraction was most prominent in JAN-2026 (-115 bps), FEB-2031 (-42 bps), and APR-2049 (-6 bps), as investors continued to rebalance portfolios in a rate-sensitive environment.
