Naira Assets Rally as Investors Position Ahead of Bond Auction
Nigeria’s sovereign bond market witnessed notable gains in the secondary market, as stable yields encouraged renewed investor interest.
As a result, the average yield on Federal Government bonds fell by 19 basis points to 18.64%.
Ahead of a bond auction scheduled for the following Monday, the Debt Management Office (DMO) plans to raise ₦100 billion through a combination of reissuing existing bonds and introducing new ones.
Market analysts suggest that the government’s reduced reliance on local borrowing—enabled by savings from the removal of fuel subsidies—has improved fiscal metrics, despite declining oil export revenues.
Amid expectations of tighter bond supply in 2025, institutional investors, including pension funds, have ramped up activity in the secondary market, further driving yields lower.
Bullish sentiment was observed across various tenors on Thursday. Yields declined at the short (-15bps), mid (-27bps), and long (-15bps) ends of the curve. Traders pointed to strong interest in the MAR-2027 (-52bps), FEB-2031 (-47bps), and JAN-2042 (-57bps) instruments.
“Across the benchmark curve, the average yield contracted at the short (-31bps), mid (-23bps), and long (-15bps) segments, driven by demand for the MAR-2027 (-52bps), FEB-2031 (-47bps), and JUL-2045 (-57bps) bonds, respectively,” Cordros Capital Limited noted in a report.
The treasury bills segment also remained upbeat, supported by strong demand at the midweek auction, which recorded a high bid-to-offer ratio of 7.71x. Investors who failed to secure allocations turned to the secondary market, especially for long-term instruments. Consequently, the average T-bill yield declined by 15 bps to 20.42%.
