Mixed Auction Results Weigh on Nigeria’s Fixed-Income Market as Investors Remain Cautious
Nigeria’s fixed-income market faced a difficult week as mixed auction results and cautious investor sentiment triggered a bearish trend across both primary and secondary segments. The market was influenced by shifting domestic liquidity conditions and mounting global economic pressures, leaving investors increasingly selective in their portfolio decisions.
Analysts at Meristem Securities said investors are becoming more cautious as they adjust their portfolios in response to persistent inflation concerns and changing yield expectations. According to the firm, these factors have led to selective sell-offs in both bond and Treasury bill markets, as investors seek better returns in newly issued instruments.
During the week, the Central Bank of Nigeria conducted an Open Market Operation auction, offering N600 billion across 8-day, 99-day, and 113-day maturities. Total subscriptions rose to N767 billion, reflecting a modest increase in demand. However, the apex bank allotted only N81 billion, leaving the auction with a low bid-to-cover ratio of 0.14x and a subscription-to-offer ratio of 1.28x. Stop rates for the 99-day and 113-day instruments settled at 19.35 percent and 19.69 percent respectively, while the 8-day instrument recorded no sales.
In the Treasury Bills primary market, the central bank offered N850 billion, down from the N1.05 trillion offered in the previous auction. Despite the lower supply, investors heavily targeted the long-term 364-day bill, which attracted N2.57 trillion in subscriptions—about 92.44 percent of total bids. The total allotment reached N933.92 billion, pushing the subscription-to-offer ratio to 3.27x. While rates for the 91-day and 182-day bills held steady at 15.95 percent and 16.65 percent, the 364-day rate edged slightly lower to 16.72 percent.
Meanwhile, secondary market activity remained largely negative as investors sold older holdings to reposition in newly issued higher-yield securities. This rotation pushed yields higher, especially for instruments such as the 17-Dec-26 and 4-Feb-27 bills, raising the average Treasury bill yield by 20 basis points to 17.66 percent. The Federal Government bond market also maintained a bearish tone, with yields rising to 15.76 percent amid sell-offs in short- and long-dated bonds. On the global stage, Nigeria’s Eurobond market closed weaker as stronger U.S. inflation data and a firmer dollar triggered global risk-off sentiment, pushing average yields up to 7.25 percent.
source: punch