Nigerian Bonds Yield Rises Ahead of April Inflation
The average yield on Nigerian government bonds increased as investors trimmed interest in the secondary market ahead of inflation data for the month of April. The disinflation occurrence in March reduced real return on investment, and the market expects the monetary policy committee of the Central Bank to maintain the status quo at the next meeting.
The statistics office is scheduled to release inflation figures in the latter part of the week with mixed expectations after a surprise surge in the consumer price index in March.
Last week, trading activities in the bond market were bearish, particularly at the short end (+10bps), and mid segment (+8bps) of the curve. Transactions recorded thin volumes and cautious investor sentiment. Early in the week, activity was muted, with few bids for the Jan 2035s and offers concentrated on the Jun 2053s and Feb 2031s.
Midweek saw bearish momentum on mid-tenor papers like Feb 2031s, May 2033s, and Jan 2035s, but overall participation remained low. Focus on the NTB auction further dampened activity, though light retail trades emerged in long-dated maturities.
By week’s end, trades clustered around Apr 2029s, Feb 2031s, May 2033s, and Jul 2034s. Fixed income market analysts said they saw investors pick up the MAR-27 (+58 bps), MAR-26 (-40bps), and JUL-34 (+23bps) papers.
Consequently, average yields edged higher by 7 bps to settle at 19.07%. Fixed income market analysts anticipated that the Nigerian government bond market will likely continue to see selective investor participation in the near term
Across the benchmark curve, the average yield increased at the short (+12bps) and long (+2 bps) ends. The yield surge was driven by selloffs of the MAR-2027 (+59 bps) and APR-2037 (+15bps) bonds, respectively. Yield decreased at the mid (-7bps) segment following demand for the APR-2032 (-47 bps) bond.
Analysts at Cordros Capital Limited expect a moderation in bond yields, influenced by the anticipated dovish monetary policy stance and demand and supply dynamics in Q2-25. #Nigerian Bonds Yield Rises Ahead of April Inflation FG, World Bank launch $500m irrigation, power project
