Average Yield on Bond Spikes 16bps over Aggressive Repricing

Average Yield on Bond Spikes 16bps over Aggressive Repricing

The bond market records an upward rate repricing as benchmark yield curve expanded by an average of 16 basis points (bps) to 5.72%.

The uptick was supported by what analysts at Chapel Hill Denham dubbed aggressive upward yield repricing.

The repricing comes at the short (+25bps to 3.02%), mid (+16bps to 6.06%), and long (+10 bps to 7.41%) end of the curve.

Meanwhile, analysts noted that while rate adjusted in the bond segment, the fixed income market traded mixed as investors remained cautious.

Trades in the Treasury bills market opened mildly bearish, aided by sell-offs on two instruments along the long end of the market.

At the front end of the curve, Treasure Bills and open market operations (OMO) curve remained flattish, inching marginally higher by 1bps apiece to 0.38 and 0.53%, respectively.

Chapel Hill Denham stated in a note that in the absence of FGN’s primary market offering this week, activity is expected to improve in the secondary market.

Similarly, the financial system liquidity remained robust, opening the new week at N334.4 1billion, from N785.9 billion last Friday.

Thus, against that backdrop, the Open Buy Back (OBB) and Overnight (OVN) rates compressed by 350bps and 250bps to 1.0% and 2.0%, respectively.

Then, this week, market expects inflows from a maturing OMO bill worth NGN250.51bn to positively impact system liquidity.

“In the absence of FGN primary market offering, we expect funding pressures to moderate for the rest of the week”, analysts stated.

Read Also: Yields Maintain Uptrend as Investors Sustain Sell-off in T-Bills

Meanwhile, in the currency market, the exchange rate traded range bound in official segments.

The pair was unchanged at N379.00 and N394.00 at the official segment and I&E Window, respectively.

However, Naira remained stable against the dollar in the parallel market selling at N477.

Average Yield on Bond Spikes 16bps over Aggressive Repricing