Benchmark Yield on Nigerian Bonds Dips as Demand Rises
The average yield on Nigerian government bonds slid marginally in the secondary market to close at 19.40% on Tuesday as local investors, asset managers increased positions.
Investors have been adjusting to key market developments including slowdown in local bonds supply the Debt Management Office (DMO) and inflation uptick.
Some analysts, rating agencies have projected that the monetary policy rate will increase further at the Central Bank meeting in the latter part of the year.
Investment in government bonds is exposed to inflation condition, and the last uptick in Sept consumer price index widened negative real return on investment.
Debt Management Office, after initial frontloading, has reduced its monthly bonds auction by half, from N360 billion to N180 billion amidst growing investors’ appetite.
The market displayed a mild bullish trend, with participants capitalizing on attractive yields at the mid-section, notably on the Jul-34 bond, which saw the largest yield drop of 77bps, TrustBanc Capital Limited told investors in a note.
Fixed income market analysts however noted that selling bias emerged on selected maturities at the near region by sellers who sought to raise liquidity.
On the day, the average benchmark yield inched lower by 1bp to close at 18.93%. “We expect prevailing market conditions to persist in the coming sessions”, TrustBanc Capital said.
Also, Cordros Capital Limited stated that across the benchmark curve, the average yield contracted at the mid (-15bps) segment, driven by the demand for the JUL-2034 (-77bps) bond.
However, yield expanded at the long (+7bps) end following profit-taking activities on the APR-2037 (+100bps) bond. The average yield remained unchanged at the short end. #Benchmark Yield on Nigerian Bonds Dips as Demand Rises Oil Rises on Middle East Tensions, OPEC+ Output Decision
