Nigeria’s Bond Price, Yields Steady as Naira Pops
The average yield on the Federal Government of Nigeria’s (FGN) bonds traded flattish on Thursday amidst uncertainties in the local economy. The sustained cash crunch and worsening headline inflation rate were greeted by further interest rate hike.
Nigeria also faces foreign exchange scarcity due to low US dollar earnings from oil exports on account of lower production volume which printed at 1.3 million barrels per day, confirmed by the oil cartel.
Yields have been projected to rise in the second quarter of 2023 as government implement borrowing plans to support the budget deficit. However, the market has spotted a downside to yield repricing.
Liquidity level in the financial system is pulling back higher spot pricing on government issuance at the primary market. Spot rates have been fluctuating in the treasury bills segment.
In the bond market, FGN bonds was largely flat due to thin trading on dated debt papers in the secondary market. According to market data, the average yield remained flat at 13.19%, traders said in separate briefs.
Across the benchmark curve, investment banking firm Cordros Capital Limited told clients via email that the average yield expanded at the short end, gaining a basis point on account of selloffs.
The increase came following the sell-off of the JAN-2026 (+7bps) bond but contracted at the long (its yield sloped down by 2 basis points) end as investors demanded the APR-2049 (-7bps) bond. Meanwhile, the average yield was flat at the mid-segment.
Specifically, the 10-year and 20-year FGN bonds were 3 basis points and 6 basis points richer, while their corresponding yields decreased to 12.49% (from 12.50%) and 14.83% (from 14.88%), Cowry Asset Management said in a note to clients.
The 15-year and 30-year FGN Bonds yields were steady at around 14.69% and 15.15%, respectively. Elsewhere, analysts noted that the value of the FGN Eurobond traded higher for most of the maturities amid sustained bullish sentiment.
Similarly, the average secondary market yield contracted to 13.23% amidst a moderate swing in the exchange rate. The Naira weakened against the greenback, trading lower at N461.67 (from N461.5) at the Investors and Exporters windows, data from the FMDQ Exchange platform showed.
However, the parallel market was steady at N747 as, Brent crude price rose 0.18% to $76.83 per barrel, while west texas instruments (WTI) crude gained 0.29% to $71.10 per barrel.
Oil futures rose on Thursday despite an unexpected buildup in US crude stock (+1.1 million barrels) last week. # Nigeria’s Bond Price, Yields Steady as Naira Pops CBN Devalues Naira 12.95% despite Rising Foreign Reserves
