Bonds Yield Inches Near 20% as Nigeria’s Inflation Bites
The Nigerian bond benchmark yield rose near 20% in the secondary market as inflation surged, triggering risk-off sentiments in the market. Inflation for December climbed by 20 basis points to settle at 34.80% despite the Central Bank of Nigeria’s hawkish position that pushed interest rate to 27.50% in 2024.
The authority plans to raise more than N7 trillion from the local bond market in 2025 to finance the budget deficit, but the Debt Management Office is yet to provide details of its first quarter auction sales.
It was a relatively quiet day at the secondary bond market on Wednesday, but fixed income analysts at CardinalStone observed some selloffs at the short end of the curve, particularly the JAN-26 (+92bps) paper.
This drove an 8-bps expansion at the short end of the curve, the investment firm told investors in a note. Local bond investors remained cautious, opting to stay largely on the sidelines despite a 20 basis points increase in the headline inflation rate for December.
At the end of the trading session, the average yield expanded by 4bps to settle at 19.96% Despite subdued sentiments, some activity was observed on February 2031 and February 2034 papers. Trading volume remained low, with only a limited number of transactions taking place.
“The market was heavy with uncertainty, keeping trading volumes light and the focus restricted to the shorter end of the yield curve,” TrustBanc Financial Group Limited told investors in a note.
Amid the subdued atmosphere, Feb-31 bond saw limited offers quoted at 22.30/22.10 higher than the previous day’s quote of 22.15/22.00. #Bonds Yield Inches Near 20% as Nigeria’s Inflation Bites CBN Opens FX Window for BDC to Stock up at NFEM Rate
