Yields on Nigeria Bonds Reaches 14.4% Ahead of Inflation
The average yield on Nigerian government bonds reached 14.40% following moderate selling activities on fixed interest instruments. This crashed quoted prices of borrowing instruments in the secondary market amidst the expectation of an increase in the headline inflation rate.
Nigeria’s inflation rate accelerated to 25.8% in August 2023 and analysts are positive that the trend will spike further in Sept. Despite the surge, the government has been borrowing at an abysmally low rate in the debt capital market over the year.
In the secondary market fund and asset managers increased their buying momentum amidst a dearth of alternative investment windows that provide a real return that is above the average inflation rate.
Trading activities in the federal government of Nigeria’s bond secondary market were mixed but with a bearish tilt, as the average yield grew slightly by a basis point to 14.4%.
Across the benchmark curve, analysts reported that the average yield expanded at the short (+4bps) and long (+1bp) ends as participants sold off the MAR-2024 (+52bps) and JUN-2053 (+7bps) bonds, respectively.
Conversely, the average yield contracted at the mid-segment due to buying interest in the APR-2032 (-4bps) bond. Investment firm Cowry Asset Management confirmed in its market update that there was a sell-off in the MAR-24 maturity as the average yields closed bearish by 1bp.
In Nigeria’s Eurobonds market, there was positive sentiment across all maturities on Monday, characterized by the appreciation in the value of the Sovereign FGN paper. Meanwhile, the average secondary market yield closed bullish by 4bps primarily driven by buying interest. #Yields on Nigeria Bonds Reaches 14.4% Ahead of Inflation Naira Devaluation Deepens Economic Crisis in Nigeria
