Bond Yield Rises to 11.1% as Naira Appreciates

Bond Yield Rises to 11.1% as Naira Appreciates

The average on Federal Government of Nigeria (FGN) bonds spikes 8 basis points to 11.1%, according to traders’ notes. In the official foreign exchange window, the naira appreciated about two per cent to N418.

The fixed income market still awaits catalysts to drive returns higher amidst steep headline inflation rate and weak naira. Both metrics worsen Nigeria’s financial market performance but the equity market has seen a better rerating year to date.

Today, the Nigerian Exchange year to date return printed at 17.34% while the All-share index breaks the resistance level, trading at a 14-year high. Meanwhile, short term rates declined due to relatively healthy liquidity in the financial system.

Data from FMDQ Exchange shows that the overnight lending rate contracted by 742 basis points to a single-digit low of 5.1%.  In the treasury market, trading activities were quiet as the average yield stayed flat at 3.7% midweek.

Similarly, the average yield was unchanged at 4.2% in the open market operations (OMO bills) segment, according to Cordros Capital note. Traders noted that bearish sentiments dominated the FGN Bonds as the average yield expanded by 8 basis points to 11.1%.

Across the benchmark curve, Cordros Capital hint that the average yield expanded at the short (+6bps), mid (+19bps), and long (+4bps) segments as investors sold off the MAR-2027 (+28bps), FEB-2028 (+25bps), and APR-2037 (+12bps) bonds, respectively. #Bond Yield Rises to 11.1% as Naira Appreciates