The Debt Management Office (DMO) will open ₦260 billion worth of Federal Government of Nigeria (FGN) bonds for subscription on Monday as part of its monthly auction. The offer will feature two reissued instruments with 5-year and 7-year tenors, each valued at ₦130 billion.
The auction comes amid mixed investor sentiment and expectations of a potential repricing of spot rates. In the September auction, the DMO lowered the spot rate on 5-year bonds to 16% from 17.945%, reflecting easing interest rate conditions in the domestic market. Similarly, the spot rate for 7-year bonds was cut to 16.20% from 18%, coinciding with the Central Bank of Nigeria’s 50-basis-point reduction in the monetary policy rate.
Market analysts anticipate steady demand at the October auction, although opinions remain divided over pricing levels. According to MarketForces Africa, there are varying views on where spot rates may settle as market conditions continue to shift.
The fixed-income market has faced mounting pressure amid improving macroeconomic indicators. Analysts note that the Central Bank’s dovish tone signals a potential decline in fixed-income yields through the fourth quarter. Yields across short-, medium-, and long-term maturities have been trending downward as investors and wealth managers lock in positions ahead of potential rate adjustments.
Market watchers expect the evolving yield dynamics to influence activity in the secondary market next week.
“FGN Bonds won’t be exempted from the recent curve retracement post-OMO issuances at higher levels to support the curve in recent weeks despite favourable inflation print. We expect stop rates in at slightly higher levels to the secondary levels,” AAG Capital Limited said in an update.
The Nigerian secondary bond market ended last week on a bullish note, buoyed by strong investor demand across most maturities. Trading volumes remained healthy, reflecting improved sentiment and sustained appetite for fixed-income instruments amid persistent uncertainty across other asset classes.
As a result, broad-based demand exerted mild downward pressure on yields, pushing the average yield lower by 10 basis points to 15.87% for the week.
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