Benchmark Yield Rises as Investors Scale Back on Nigeria Bond
Local investors in the Nigerian bond market scaled back as portfolio rebalancing efforts persisted. Investors trimmed their positions or holdings in FGN bonds in the secondary market. Notably, sell-side action transactions outpaced moderate buying experience.
The trading direction in the market has been altered after inflation and interest rates climbed, resulting in mixed expectations. Already, bond supply by the Debt Management Office (CBN) via primary market auction sales has slowed down by at least 66%—from N360 billion to N120 billion.
The Debt Office has significantly achieved its borrowing target from the debt market for fiscal year 2024. This triggered some bullish actions in the secondary market in the recent past week, keeping yield movement in check.
On Thursday, the bond secondary market was quiet with some bearish activity observed at the short-end (+1 bp) of the curve. According to a slew of investment analysts, investors’ staked their bets on the APR-29 (+13bps) paper. Consequently, the average yield inched up slightly by 1bp to close at 19.46%.
Transactions were largely focused on the auctioned papers, with the 2029 and 2031 maturities closing 5bps and 2bps lower from their opening levels of 20.75% and 21.80%, respectively, as investors capitalized on their appealing yields, TrustBanc Financial Group said in a note.
AIICO Capital Limited saw bond market trading on a mixed to bullish note, supported by FAAC inflows and showing continued interest in the April 2029, February 2031, and February 2034 bonds.
Fixed income analysts at Cordros Capital Limited explained that across the benchmark curve, the average yield pared at the short (+1bp) end, driven by sell pressures on the JAN-2026 (+2bps) bond, but closed flat at the mid and long segments. Naira Rises as Against Dollar as IOCs Inflows Boost FX Liquidity
