Benchmark Yield on Nigerian Bond Climbs to 19%
The average yield on Nigerian bonds climbed as investors reduced their holdings amidst uncertainties in the economy. Traders said the average yield expanded by 5 basis points to 18.98% as pension asset managers, investors adjusted their portfolios.
Across the benchmark curve, the average yield expanded at the short (+17bps) end, driven by sell-offs on the JAN-2026 (+86bps) bond; but closed flat at the mid and long segments, Cordros Capital Limited told investors in a note.
The latest auction conducted by the debt management office suggested that investors have started to seek rates repricing over uncertainties in the financial market.
The debt office has raised more than N4 trillion in the local debt capital market out of the amount planned for 2024. Following the authority bond front loading in the secondary quarter, analysts expect issuance to reduce in the second half of the year.
FGN bonds market closed bullish in Q2’24, falling by 10bps to 18.84% at the end of Q2’24 from 18.84% at the end of Q1’24. Traders said the slight bullish close for the quarter can be alluded to the downtrend in stop rates at the auction, particularly the first two auctions in Q2’24.
Analysts said the July auction makes predictions challenging to decipher. Investors showed apathy toward the primary market auction, which resulted to lower subscription level.
“We know that the DMO has raised a significant amount from the bond auction in H1 24, worth about ₦4.13 trillion, and at a very high cost”, AICCO Capital Limited said. #Benchmark Yield on Nigerian Bond Climbs to 19%
