Market News

By Abdullateef Aliyu

Nigeria’s Debt Management Office (DMO) is set to open its latest Federal Government of Nigeria (FGN) bond auction on Monday, offering investors N1.10 trillion across three reopened securities as the domestic fixed-income market faces renewed pressure from rising yields.
The offer comprises N250 billion of the 10-year FGN bond maturing in January 2035, N100 billion of the 20-year bond maturing in April 2037 and N750 billion of the 15-year bond maturing in June 2038.

The 15-year instrument accounts for the bulk of the offer, representing 68.2 per cent of the total, while the 10-year and 20-year bonds account for 22.7 per cent and 9.1 per cent, respectively.

The auction comes against a backdrop of cautious investor sentiment in the government bond market.
Daily Trust reports that recent secondary-market trading has been largely bearish, with weak demand across key maturities pushing bond prices lower and yields higher.

The average yield on Nigerian government bonds consequently increased by 13 basis points week-on-week to 17.13 per cent, reflecting pressure on fixed-income assets as investors reassess returns and the outlook for inflation and interest rates.
The latest auction is also significant because the securities being reopened are established benchmark instruments.

At the July auction, the same January 2035, April 2037 and June 2038 bonds attracted combined subscriptions of about N1.74 trillion against N1.2 trillion offered. The DMO ultimately allotted about N929.3 billion to the market, with marginal rates of 18.34 per cent, 18.35 per cent and 18.40 per cent, respectively.
The strong subscription levels recorded in July suggest that investors continue to show interest in government securities, although the higher yields indicate that they are demanding attractive returns amid prevailing market and inflation risks.

The concentration of the current offer in the 15-year bond also means the auction could provide an important signal of investor appetite for long-term government borrowing.

The DMO’s provisional third-quarter issuance calendar shows that the agency has planned further reopenings of the January 2035 and June 2038 bonds, highlighting their role as key instruments in the government’s domestic borrowing programme.