Bond Yield Falls as Traders Buy Short, Sell Mid-Tenor Notes
The average yield on Federal Government of Nigeria (FGN) bonds was mixed on Monday as sell pressure was witnessed on the mid-end of the curve while investors positioned in short duration and sideline long tenored debt instruments.
Due to the absence of liquidity pressures in the financial system on Monday, the average interbank rate dropped by 100 basis points to close at 12.13%, following contractions at both the Open Buy Back rate and Overnight rate.
Data from the FMDQ Exchange trading platform shows that the Overnight rate decreased by 1.00 per cent to close at 12.25 per cent as against the last close of 13.25 per cent. Read: Fixed Income Investors See Yields Jump in Short, Mid-Tenor Bonds
Also, the Open Repo rate also decreased by 1.00 per cent to close at 12.00 per cent compared to 13.00 per cent on the previous day. In the secondary market for Nigerian Treasury Bills, trading activities closed on a flat note with the average yield across the curve remaining unchanged at 4.53 per cent.
Average yields across short-term, medium-term, and long-term maturities remained unchanged at 3.52 per cent, 4.05 per cent, and 5.40 per cent, respectively, according to a market note from FSDH Capital.
In the OMO bills market, the average yield across the curve closed flat at 5.68 per cent, some fixed income traders reported in separate notes on Monday. It was noted that average yields across short-term and long-term maturities remained unchanged at 5.42 per cent and 5.81 per cent, respectively.
Alpha Morgan Capital traders said in a note that activities at the FGN bond secondary market traded on mixed sentiments as buying interests was witnessed at the short end of the curve, slight sell-side pressure was seen at the mid-end while the long-tenured instruments remained flat.
Consequently, the average bond yield across the curve cleared lower by 2 basis points to close at 11.52 per cent from 11.54 per cent on the previous day. Average yields across short tenor and medium tenor of the curve declined by 13 and 2 basis points, respectively. However, the average yield across the long tenor of the curve remained unchanged.
The 14-MAR-2024 maturity bond was the best performer with a decrease in the yield of 35 basis points, FSDH Capital said in its note while analysts noted the 23-FEB-2028 maturity bond was the worst performer with an increase in the yield of 22 basis points.
Activities at the FGN Eurobond market traded mostly bearish, following selling pressure across the sovereign curve except for the Jun-2022 instrument that witnessed some demands. In sum, the average yield climbed by 10bps to close at 6.67%, according to traders notes.
#Bond Yield Falls as Traders Buy Short, Sell Mid-Tenor Notes
