Benchmark Yield on FGN Bonds Steady at 18.69%
In the bond market, there was slight trading activity for FGN Bonds in the secondary space. However, the average yield stayed muted at 18.69%, sustaining negative interest yield on naira asset.
Yields on Nigerian government has remained subdued due to deliberate efforts by Debt Management Office (DMO) to keep spot rates on issuance versus the monetary authority quite attractive offers.
The market recorded a slight increase yield at the short (+1bp) end due to mild sell-offs of the MAR-2025 (+2bps) bond while it was unchanged at the mid and long segments.
Real interest rates in Nigeria are still negative despite the increase in the Monetary Policy Rate and other interest rates. This is mainly due to an upward-trending inflation, which reached a multi decade high in April.
Prior to the recent hike in Monetary Policy Rate (MPR) in February 2024, rates on government securities increased. Specifically, stop rate for 364-days NTB rose form 7.2% in June 2023 to 16.8% in November 2023 The FGN Bond and Treasury Bills markets experienced a significant rise in yields in 2024.
The average yield in the FGN Bond market increased from 14.13% on the first trading day of the year to 19.29% as of March 26th. But it has since dipped below 19%.
Meanwhile, yields in the Treasury Bills market increased at a much higher rate to 17.67% in March from 6.29% at the beginning of the year. This follows the unprecedented rise in the monetary policy rate, thereby pushing up yields across markets. Naira Rises by 19% as Forex Market Pressures Ease
