Bonds Market Rallies, Wealth, Asset Managers Boost Portfolio
The benchmark yield on Nigerian government bonds declined as wealth, asset managers ramped up local bonds in the secondary market ahead of fresh supply.
Last week, investors increased bets on naira assets via secondary market transactions ahead of inflation data, and sustained expectation that consumer price index will maintain downtrend.
The market anticipates rates repricing amidst positive real interest rate of 5.62% ahead of Debt Management Office bonds supply at the primary market auction in Sept.
Rates pricing will mirror market conditions, liquidity positions and long standing appetite for local borrowing instruments with pension fund administrators bet staying strong.
The local bond market recorded a bullish performance all through trading sessions last week, buoyed by heightened investor demand across multiple tenor segments.
Fixed income market analysts, and some notable investment banking firm said investors actively positioned in both short and medium-dated instruments.
Positive sentiment persisted while traders observed a shift toward fixed-income assets amid lingering uncertainties in other asset classes.
The broad-based buying interest exerted mild downward pressure on yields, analysts said, leading to a modest 13-basis-point decline in the average yield, which closed the week at 16.97%.
Investors showed interest in mid-segment of the curve, as notable demand was observed across the FGN bonds expiring in 2034 and 2035.
Though bullish, transactions were relatively soft through most of the week, with limited activity across the curve. Early sessions saw modest interest in the FGN bonds that will mature in 2029, 2031, 2033, and 2053, though executed volumes were thin.
As the week progressed, activity picked up slightly with cautious bullish sentiment, particularly around the belly of the curve. Buying interest in FGN bonds expiring in 2031 and 2033 supported a mild rally, with yields on these papers compressing by about 25bps and 40bps respectively.
Despite the subdued trading environment, investors maintained a cautious tone, keeping overall activity light. By week’s close, average mid-yields declined 4bps week-on-week to 16.97 %. Market anticipates sentiment in the FGN bonds market to be mixed to bullish in the new week, supported by current liquidity levels.
Elsewhere, sentiment in the bills market remained bullish, as unmet bids from yesterday’s Nigerian Treasury B auction filtered into the secondary market. Demand was concentrated on the short-end of the curve, particularly the Dec-25 paper (-83bps). As a result, average yields declined by 4bps to close at 18.57%. #Bonds Market Rallies, Wealth, Asset Managers Boost Portfolio Insurance Index Dips as Investors Sell AXA Mansard, AIICO
