FGN Bond Yields Decline to 18.64% Amid Anticipation of DMO’s ₦100 Billion Auction

Yields on Federal Government of Nigeria (FGN) bonds dropped to an average of 18.64% in the secondary market ahead of a new bond auction by the Debt Management Office (DMO), scheduled for Monday. The decline reflects a positive shift in investor sentiment, supported by expectations of limited bond supply at the upcoming primary market offering.

According to market updates, the DMO is preparing to raise ₦100 billion through a combination of reopened and newly issued bonds, with ₦50 billion each allocated to the April 2029 (5-year reopening) and a new June 2032 (7-year) issuance.

In the secondary market, bond trading closed last week on a positive note, buoyed by favourable sentiment, an improved sovereign risk outlook, and sustained interest across various maturities. Analysts at Cowry Asset Management noted in a research report that, despite a slow start to the week—partly due to investor focus on the Open Market Operations (OMO) auction—activity gained traction by midweek.

Investors began shifting interest back to government bonds, particularly across mid- to long-dated maturities such as the April 2029, February 2031, May 2033, March 2035, and June 2053 instruments.

While profit-taking earlier in the week subdued some activity, the final trading sessions saw selective demand resurface. Notably, heightened interest was recorded in the February 2031, May 2033, February 2034, and March 2050 bonds.

Traders reported a moderately bullish outlook, driven by renewed demand for specific maturities. This sentiment was reflected in a sharp drop in yields, with benchmark notes such as the January 2035, June 2038, and March 2026 shedding 57 basis points, 57 basis points, and 60 basis points, respectively.

As a result, the average yield across the entire FGN bond curve declined by 25 basis points week-on-week, settling at 17.83%, indicating an improvement in domestic appetite for government securities.

Looking ahead, analysts project that the bullish momentum will likely continue in the short term, supported by solid investor interest, favourable macroeconomic indicators, and enhanced fiscal liquidity buffers.

The upcoming auction is expected to attract strong participation, as investors anticipate competitive pricing amid limited bond supply. Cowry Asset expects the DMO to record a successful outing as it seeks to tap the local debt market to finance the federal government’s 2025 budget.