The debt management office, or DMO, held the most recent primary market auction, wherein Nigeria’s 10-year bond was offered at a spot rate of 21.50% to asset managers and other investors in the local debt capital market.
In light of the rising rate of inflation, DMO provided investors who purchased Federal Government of Nigeria (FGN) 10-year bonds 21.50% in exchange for their money, according to information from the auction results.
Compared to the last auction, which sold at an average rate of 20%, this represents an increase. Tenors of fixed interest instruments have continued to see high yields. However, because of the negative interest rate, real return on investment has decreased.
Meanwhile, the local FGN bonds market was quiet as participants shifted their attention to bond auction in the primary market. Consequently, the average yield flattened at 18.61%.
At the auction, DMO offered ₦450.00 billion across the 2029, 2031 and 2033 FGN Bond papers. According to traders, subscription level or demand was relatively strong, with bid-to-offer and bid-to-cover both closing positive at 1.62x and 1.10x, respectively.
Spot rate on APR-2029 FGN Bonds closed at 19.64%. DMO offers 201.9% on FEB-2023 FGN bonds to interested market participants, while investors get a 21.50% spot rate on 2033 FGN bonds. Analysts said they expect trading sessions in the secondary market to trend bearish, given the uptick in stop rates at the auction.
