SAT JUNE 21 2025-theGBJournal| The FGN bond secondary closed bullish on Friday, driven by demand from portfolio managers.
The average yield declined by 27bps to 18.6%. Across the benchmark curve, the average yield declined at the short (-36bps), mid (-27bps), and long (-23bps) segments driven by demand for the MAR-2027 (-60bps), MAR-2035 (-57bps), and JAN-2042 (-57bps) bonds, respectively.
The outcome of the June FGN bond auction holding on Monday (June 23) is expected to shape the direction of yields in the secondary market.
At the auction, the Debt Management Office (DMO) is set to offer instruments worth N100 billion through the re-opening of the APR-2029 bond and the issuance of a new JUN-2032 bond.
At the auction, market participants expect marginal rates to taper.
Meanwhile, the overnight (OVN) rate climbed by 192bps w/w to 28.9%, as debits for the OMO PMA (N1.07 trillion) and Central Bank of Nigeria (CBN) FX swaps (c. N1.00 trillion) outstripped the inflows from OMO (N975.88 billion) and NTB (N38.04 billion) maturities.
Consequently, the financial system liquidity wrapped up the week in a net long position of N780.22 billion (compared to a net long position of N986.79 billion in the previous week) due to heightened activities at the CBN’s SDF window (average: N872.98 billion).
Next week, barring any mop-up activity by the CBN, analysts expect inflows from Federation Accounts Allocation Committee (FAAC) disbursements (N1.12 trillion), NTB maturities (N283.79 billion) and FBN bond coupon payments (N216.76 billion) to boost system liquidity, thereby weighing on the OVN rate.
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