Sell Pressure Increases Nigerian Bonds Yield To 18.83%

FGN Bond For Jan. 2021 Oversubscribed

Due to investors selling their naira assets in fixed-interest instruments on the secondary market, the benchmark yield on Nigerian government bonds increased to 18.83%. The Debt Management Office (DMO) announced that it had reopened bonds totaling N450 billion, which caused buying sentiment to pause.

When it comes to pricing government borrowing instruments, the Nigerian debt office has remained tight-lipped when compared to spot rates on Treasury bills. In addition, it frontloads its offers for the entire year while maintaining a low spot rate.

According to market observers, low rate pricing in previous primary market auctions was made possible by the persistent demand for Naira assets. The economy’s significant increase in money supply—more than 70%—has served as a cushion for the ongoing rise in demand for government notes and other short-term instruments.

In the secondary market on Thursday, the market recorded some selloffs on FGN Bonds at the short (+3bps) and long (+17bps) ends of the curve. Particularly, asset managers and other investors sold their interest in the Mar-2026 FGN bonds, causing its yield to rise by +53bps.

The market also saw investors offload Jun-3038 instruments; as such, its yield rose by +96 bps. Meanwhile, the average yield declined at the midpoint (-7 bps) segment due to demand for the APR-2032 (-17 bps) bond. Consequently, the average yield expanded by 6 bps to close at 18.83%.

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