Benchmark Yield Steady as Traders Boycott Bonds Market
The average yield on Federal Government of Nigeria (FGN) bonds was steady in the secondary market yesterday due to thin trading session.
At the end of the proceeding in the secondary market, the average yield stayed muted at 19.34% as investors stand down trading activities on the naira asset.
Fixed income analysts said post primary market auction trading activities has been subdued as investors’ appetite continue to shift due to increase in negative interest yield.
MarketForces Africa gathered that inflation rate surged has eaten into investors’ portfolio returns, while projections show that Nigeria’s consumer price index (CPI) would keep uptrend in the fourth quarter of the year.
A slew of fixed interest securities analysts said trading activities on Nigerian bonds have been mixed month on month as liquidity level and spot rates pricing set direction for pension fund administrators and other investors.
On Wednesday, the local FGN bonds market experienced mixed sentiments but ultimately ended on a slightly bullish note, AIICO Capital Limited told investors in a note.
Analysts noted that most of the activity focused on the February 2031 and May 2033 bonds, as investors capitalized on the attractive yields offered by these securities.
FSDH said in a report that the hike in rates and yields in Q3 2024 increased investor interest in the fixed-income market, putting downward pressure on FGN Bond yields during the quarter.
As a result, the average FGN Bond yield peaked at 20.1% in mid-August, but due to demand pressures, it fell to 18.7% as of 27 September 2024. #Benchmark Yield Steady as Traders Boycott Bonds Market
