DMO Raises N1.6trn as Bond Yields Fall to 16.79 Percent
Nigerian government bonds saw yields drop sharply in September, with non-competitive allocations overtaking competitive bids.
Key points
- The DMO raised N1.6 trillion with a bid-to-offer ratio of 1.49 times.
- Non-competitive allotments reached N850 billion, surpassing competitive bids of N748.6 billion.
- Yields on the June 2038 bond fell to 16.85 percent as inflation eased to 15.39 percent.
The Federal Government raised N1.6 trillion in its September bond auction. Yields fell to 16.79 percent as non-competitive allocations grew.
Competitive bids dropped to N748.6 billion while non-competitive shares rose to N850 billion. This shift changes the risk profile for fixed-income investors.
Allocation shifts alter market dynamics
The Debt Management Office offered N1 trillion across two bonds. Subscriptions reached N1.5 trillion, creating a bid-to-offer ratio of 1.49 times.
This ratio is lower than the 1.57 times recorded in August. Non-competitive allotments now exceed competitive bids in total value.
Tribune Online reports that this trend gives the DMO more control over pricing. It allows the government to secure funding without aggressive competitive bidding.
Yields decline narrows bid ranges
The marginal rate on the June 2038 bond fell by 94 basis points. It settled at 16.85 percent, down from previous levels.
The bid range for this bond narrowed to 15.0–18.0 percent. Previously, the range stood at 16.0–19.0 percent during the prior auction.
Inflation data supports lower rates
Headline inflation eased to 15.39 percent year-on-year in August. This slight drop from 15.43 percent in July supports the yield decline.
Naira appreciation and softer food prices contributed to this moderation. However, geopolitical tensions in the Middle East remain a risk to energy prices.
