DMO Raises N1.6 Trillion as Bond Yields Fall to 16.85 Percent
Nigerian government bonds saw yields drop significantly during the September auction, shifting investor focus toward reinvestment risks and duration management.
Key points
- The Federal Government raised N1.6 trillion in the September auction with a 1.49 bid-to-offer ratio.
- Non-competitive allotments increased to N850 billion while competitive allocations decreased to N748.6 billion.
- The marginal yield on the June 2038 bond dropped by 94 basis points to 16.85 percent.
The Federal Government raised N1.6 trillion in its September bond auction. This total reflects a shift in market dynamics for fixed-income investors.
Non-competitive allotments increased while competitive bids declined. This change alters the risk profile for those entering the market now.
Auction details show rising non-competitive share
The Debt Management Office offered N1 trillion across two bond tranches. Investors subscribed for N1.5 trillion in total bids.
Competitive allocations fell to N748.6 billion from N805.2 billion in August. Non-competitive allotments rose to N850 billion from N752.3 billion.
This mix gives the government more control over pricing. It reduces reliance on aggressive competitive bidding for funding.
Yields drop sharply for long-dated bonds
The marginal rate on the June 2038 bond fell by 94 basis points. It cleared at 16.85 percent, down from previous levels.
The new September 2036 bond cleared at 16.79 percent. The bid range narrowed to 15.0–18.0 percent.
Lower yields typically support the prices of existing securities. This creates potential capital gains for current holders.
Inflation data supports the disinflation trend
Headline inflation eased to 15.39 percent year-on-year in August. This represents a slight improvement from 15.43 percent in July.
