FGN Bond Yield Rises Near 19% over Sell Pressure
The average yield on Federal Government of Nigeria (FGN) bond climbed marginally due to mild selloffs in the secondary market in the just concluded week.
Ahead of inflation and lower bonds issuance in the third quarter, investors and other market participants have been cautious with local bonds amidst subdued rate.
Inflation has been projected to start receding due to base effects, according to investment banking firms. Weighing the market dynamics, trading in the FGN bonds secondary market was mixed, with most activities observed at the short and long ends of the curve.
As a result, the average yield expanded by 2 basis points to 18.8% on Friday in the secondary market, Cordros Capital Limited said in a note.
Fixed interest securities traders reported the average yield advanced 8 basis points at the short end of the curve as a result of sell pressure. The yield surged followed sell pressures on the MAR-2025 (+17bps) bond but closed flat at the mid segment.
Conversely, the average yield pared at the long (-1bp) end as players demanded the MAR-2035 (-28bps) bond. “In the upcoming week, we envisage a possible upward repricing of yields, particularly on short-term instruments”, traders said in the note.
However, fixed interest income analysts said they do not rule out pockets of demand on some attractive maturities as the recently published Q3-2024 bond issuance calendar indicates reduced supply to the market.
For the rest of the year, Cordros Capital Limited said the firm maintains its medium-term expectation of elevated yields consequent to anticipated monetary policy administration globally and domestically and sustained imbalance in the demand and supply dynamics.
The FGN bonds market had a muted week but closed on a bearish note. Overall, the average mid-yield increased by 7bps to 18.91%, week-on-week. Treasury Bill Yield Climbs as Banks Trim Holdings
