The demand at the March FGN bond auction dropped as a result of poor liquidity in the system.
Total demand at the auction was significantly lower than in the previous month, with bids amounting to N530 billion, compared with N1.63 trillion in February. Consequently, total sales stood at N271 billion, well below the N910.4 billion recorded at the prior auction.
“Market liquidity has been tight for some weeks now, preventing a lot of traders from taking part in the auction,” Joshua Joseph, a fixed-income analyst at CSL Stockbrokers, said.
The market was short 923.56 billion on Monday, the day of the auction.
The auction includes two offerings, a N200 billion re-opened five-year savings bond, maturing in April 2029, and a N100 billion re-opened nine-year savings bond, maturing in May 2033.
The Debt Management Office (DMO) raised N271 billion for the federal government, meeting its target to secure up to N1.8 trillion in the first quarter of 2025.
On the five-year bond, the DMO sold N4.7 billion at a yield of 19.0 per cent down from 19.20 per cent at the last auction.
The nine-year bond got the most investors’ attention, seeing almost five times its offer, however only N266 billion was sold at a yield of 19.99 per cent.
“The downward shift in yields aligns with the moderation in inflation, which eased to 23.18 per cent in February 2025 from 24.48 per cent in January,”
“The market is also adjusting to signals from the Monetary Policy Committee, which, at its February meeting, hinted at potential policy adjustments in response to the revised inflation outlook,” analysts at FBNQuest said in its report today.
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