Nigerian Bonds Face Sell Pressure Ahead of Inflation Data
In the bond market, trading activities reflected bearish investor sentiment ahead of inflation and the expectation that the Debt Office will ramp up borrowing in the secondary market.
Fixed income market investors loosened their grip on their naira asset holdings in the secondary market, dragging yields lower across short- to long-duration maturities.
Capital rotated from both bonds and equities into Treasury bills following recent repricing of spot rates in the segment – higher yields were offered as the authority sought to keep hot money from foreign investors.
With inflation-surge expectations, the market anticipates returns on Nigerian government bonds to contrast, reducing further returns on local bonds, which are currently paying lower yields than Treasury and OMO bills.
Broadstreet traders reported that Nigerian bond yields expanded in the short (+4bps) and long (+1bp) segments of the curve – higher borrowing costs for the authority.
The market recorded that investors particularly dumped Bonds that will expire in 2029, 2030s, and 2031. As a result, the average FGN bond yield inched up by 1bp to 17.64%.
The trading pattern reversed the bullish sentiment posted last week, as average yields declined by 15 basis points week on week to close at 17.63% per annum.
The bond yield expansion reported last week was anchored at the short (0-5Y) and mid (6-12Y) ends of the curve, where yields declined by 11bps and 25bps, respectively, while the long-end (>12Y) ticked up marginally by 2bps week on week. FG Lists 2 Savings Bonds for Subscription in July
