DMO opens N1.1trn FGN bond auction as yields climb to 17.13%

Nigeria's Debt Management Office opens a N1.10 trillion Federal Government bond auction on Monday, offering three reopened securities as yields keep rising in the domestic fixed-income market.

The offer includes N250 billion of the 10-year FGN bond maturing January 2035, N100 billion of the 20-year bond maturing April 2037, and N750 billion of the 15-year bond maturing June 2038. The 15-year paper makes up 68.2% of the offer. The 10-year and 20-year bonds account for 22.7% and 9.1%, respectively.

Yield pressure

Daily Trust reports that secondary-market trading has been mostly bearish, with weak demand across key maturities pushing bond prices lower and yields higher. The average yield on Nigerian government bonds rose 13 basis points week-on-week to 17.13%.

Investors are reassessing returns as they weigh inflation and interest rate expectations, keeping pressure on fixed-income assets.

Strong July demand

The auction reopens established benchmarks. At the July auction, the same three bonds attracted combined subscriptions of around N1.74 trillion against N1.2 trillion offered. The DMO allotted about N929.3 billion, with marginal rates of 18.34%, 18.35%, and 18.40% for the three maturities.

Those strong subscription levels show investors still want government securities, but the higher yields suggest they are demanding attractive compensation for market and inflation risks.

Long-term signal

The heavy concentration in the 15-year bond means this auction will test investor appetite for long-term government borrowing. The DMO's provisional third-quarter calendar includes further reopenings of the January 2035 and June 2038 bonds, confirming their importance in Nigeria's domestic funding programme.

For Nigerian businesses, the auction outcome will show whether the government can keep borrowing at current yield levels, or whether rates need to move higher before investors commit to long-term papers.