Nigerian Bond Market Stabilizes Following DMO Auction

The yield on Federal Government of Nigeria (FGN) bonds remained steady in the secondary market following the Debt Management Office’s (DMO) monthly primary market auction held earlier this week.

Secondary market trading continued in a relatively subdued manner, with investors showing particular interest in mid-term securities—specifically the 2031 and 2033 bonds. The 2031 bond was available at 19.60%, approximately 20 basis points lower than the previous day’s rate, while yields at the longer end of the curve remained stable.

By the end of trading, the average yield held steady at 19.03%. Traders continued to demonstrate consistent demand for medium-term instruments following the previous day’s auction, with a particular focus on the April 2029, February 2031, and May 2033 maturities, which were trading near their mid-market values.

At April’s bond auction, the DMO successfully allocated ₦397.89 billion against its original offer of ₦350 billion. The 19.30% April 2029 bond was sold at 19.00%, while the 19.89% May 2033 bond was issued at 19.99%. Through this auction, the authority secured ₦21.12 billion from 5-year bonds and a substantially larger ₦376.77 billion from 9-year securities.

Looking at the benchmark curve, yields increased at the short end (+3 basis points) as investors divested from the April 2029 bond (+10 basis points), while yields remained unchanged in both the medium- and long-term segments.

The previous week saw average yields across the benchmark curve increase marginally by 1 basis point, closing at 19.01%. The short-term segment experienced rising yields, finishing at 19.61%, while the medium- and long-term sections of the curve saw decreases of 9 basis points (closing at 19.28%) and 16 basis points (closing at 17.45%), respectively.