Benchmark Yield Settles at 19.47% as Bond Trading Cool Off

Benchmark Yield Settles at 19.47% as Bond Trading Cool Off

Benchmark yield on Nigerian government bonds rose a bass points to 19.47% in the secondary market amidst quiet trading activities. Traders said the experience modest bearish activity at the short end (+1bp) of the curve.

Consequently, average yields edged up by 1bp to close at 19.47% on the day. The trading activities and moderate shift in yield curve was driven by expectations of higher rates at the Treasury bills auction and a tight system liquidity, according to TrustBanc Capital Limited.

With a cautious outlook, market players adjusted their portfolios upwards, leading to mild selling pressure across the yield curve, analysts said.  A slew of traders reported that trading activities concentrated at the short and mid-term bonds.

There was sell pressure on the Apr-29 and May-33 FGN bonds maturities with their yields rising by 25bps and 10bps to 20.55% and 20.25%, respectively.  Fixed income market analysts expect the mild trading activity to persist in the coming days.

In Oct, the FGN Bonds market exhibited mixed sentiments, with a bias toward bearish trading amid liquidity constraints and cautious investor sentiment, AIICO Capital Limited said in an update.

Early in the month, the market was quiet, focusing on bonds maturing in 2029, 2031, and 2033, with limited trading in other tenors, the firm stated in the report.  By mid-month, bearish pressure pushed yields up by 10-50 basis points, particularly on long-dated securities.

The highlight was the FGN bond auction, where ₦180 billion was offered for the re-opened 2029 and 2031 tenors.  The auction attracted significant interest, with total subscriptions reaching ₦389.32 billion and an allotment of ₦289.60 billion.

Stop rates surged, closing at 20.75% and 21.70% for the 2029 and 2031 bonds, respectively—reflecting a 1.75% increase compared to prior levels.  This auction created subsequent buying interest in longer tenors like the 2031 and 2033 bonds.

Toward month-end, mixed but cautiously bullish sentiment emerged, notably on 2034 and 2053 bonds, as investors looked to reposition after the primary market auction. Overall, the average yield rose 56 bps month on month to 19.33%.

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