Benchmark Yield on Nigerian Bond Dips to 19.55%
The average yield on Nigerian government bond dipped further in the secondary market as investors continue to ramp up naira assets following significant economic growth record for Q2-2024.
Buying sentiment were seen at the short, belly and longer maturities with disinflation, economic growth sending positive signals to bondholders.
The Debt Management Office (DMO) has tactically reduced the bond supply from N300 billion monthly primary market auction to N190 billion lot size. Though in surprised turn of an event, the debt agency sold more bonds that it offered in August, according to its primary market auction results.
Based on latest pattern in the debt market, investors are aligning their portfolios structure to include bonds with longer maturities due to expectation of tight supply.
The bond market rallied despite the ongoing US dollar domestic bonds offering with 5-year maturity priced at 9.75%. Analysts predict that banks, and institutional investors include high net worth individuals have the financial muscle to bid for the bond due to weak exchange rate.
Yield contractions was seen at the short (-3bps) and mid (-16bps) segments of the curve, resulting in a 7bps decline in the average yield to 19.55%, according to CardinalStone Partners Limited.
The market saw buying interests in the FEB-2031 bond, causing its yield to slump by 57bps. Also, MAY-2033 FGN bond was in demand and its yield plunged by 54bps while demand for JUL-2030 instruments drag its yield lower by -39bps. #Money Market Rates Drop as CBN Reopens Borrowing Window
