Benchmark Yield on Nigerian Bonds Ease Slightly to 16.31%
Benchmark yield on Nigerian government bonds eased slightly to 16.31% in the secondary market at the beginning of the week as investors rotated funds away from risky equities.
Bondholders, retail and corporate, stepped up buying amid rising inflation and a steady policy rate, in an attempt to lock in yields in anticipation of spot rates repricing.
The bond market closed on a bullish note on Monday, with average yields easing 1bp to 16.31%, reflecting strengthened domestic investor confidence and improved appetite for naira-denominated sovereign debt.
The last trading session on Friday saw the local bond market close on a bearish note, with average yields rising by 8bps over the week to 16.32% per annum (p.a), Coronation Merchant Bank Limited said in a research note.
Trading activity was concentrated at the short end (0–5 years) and mid-segment (6–12 years) of the curve, where yields advanced by 11bps and 9bps to 16.82% p.a. and 16.56% p.a., respectively, reflecting profit-taking activities.
Activity at the long end remained subdued, with yields unchanged at 14.53% p.a. Meanwhile, sentiment in the Eurobond market remained positive, as average yields declined by 17bps to 6.78% p.a., reflecting improved investor appetite for Nigerian sovereign risk.
Fixed income market analysts expect demand for high-yield sovereign instruments to remain resilient, supported by ample system liquidity and by the expectation that the current high-interest-rate environment will persist longer than initially expected at the beginning of the year.
Nevertheless, inflation trends, liquidity conditions, and global market developments will remain key drivers of yield movements across the fixed income market, analysts said. Naira Gains as Hydrocarbon Sales Proceeds Boost FX Reserves
