SAT JULY 12 2025-theGBJournal| The FGN bond secondary market was bullish as market participants increased the demand following the recently released Q3-25 bond auction calendar.
The average yield for bonds declined by 72bps to 16.8%.
Across the benchmark curve, the average yield decreased at the short (-71bps), mid (-92bps), and long (-28bps) segments, driven by heightened demand for the JAN-2026 (-161bps), FEB-2031 (-120bps), and APR-2037 (-84bps) bonds, respectively.
Notably, the Debt Management Office (DMO) intends to reopen the APR-2029 and JAN-2032 bonds during the quarter, with c.N60.00 billion on offer across both instruments.
Analysts at Cordros Research say they expect proceedings to remain bullish, driven by continued demand and reduced supply.
”Over the medium term, we expect continued moderation in bond yields, influenced by – the anticipated dovish monetary policy stance and demand and supply dynamics.”
Meanwhile, the overnight (OVN) rate rose by 475bps w/w to 32.2% as debits for the OMO PMA (N1.25 trillion) pressured system liquidity.
As a result, the average system liquidity deteriorated, settling at a net long position of N148.29 billion (compared to a net long position of N713.92 billion in the previous week).
Barring any mop-up activities by the CBN, we expect inflows from FGN bond coupon payments (N65.36 billion) and FAAC remittances to boost system liquidity, causing the OVN rate to taper.
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