Nigeria’s plain vanilla bonds experienced soft trading ahead of the DMO’s auction, with limited activity and sell-offs noted particularly at mid-tenors. Despite offers on several maturities, wide bid-ask spreads hindered trades. Investors showed caution due to liquidity constraints, with the average yield rising slightly to 18.61%.
In anticipation of the forthcoming auction by Nigeria’s Debt Management Office (DMO), the country’s plain vanilla bonds have softened in the secondary market. Limited trading activity was recorded, with only some interest noted around mid-tenor bonds. Offers were observed for various maturities including those maturing in April 2029, February 2031, and May 2033, yet trading remained minimal due to significant bid-ask spreads, as reported by AIICO Capital Limited.
Selling pressure was evident in the mid-segment of the bond curve with increases of six basis points, particularly noted for the June 2033 bond at 29 basis points and February 2034 bond at 35 basis points. Investors in the fixed income market showed caution in response to the prevailing bearish sentiment, driven by liquidity constraints that prompted considerable offloading across the yield curve.
The short and mid-term maturities, especially the April 2029 bond, experienced a sell-off of 10 basis points, and the April 2037 bond by 7 basis points. At the long end, the June 2053 bond concluded with an offered yield of 17.00%. Overall, the average yield saw a slight increase of 1 basis point, reaching a settlement of 18.61%.
On the upcoming Monday, Nigeria’s debt office is set to offer N300 billion worth of Federal Government of Nigeria (FGN) bonds for subscription in the primary market. This auction will serve as the final round of sales for the first quarter of 2025 and is intended to support budget deficits through local borrowing.
In summary, Nigeria’s plain vanilla bonds are currently experiencing a downturn in trading activity due to the anticipation of an upcoming auction by the DMO. Investor caution amid liquidity challenges has led to sell-offs across the yield curve, particularly affecting mid and short-term maturities. The DMO’s upcoming bond auction will target N300 billion as part of measures to address budget deficits through local financing.
Original Source: dmarketforces.com
