Bond Yield Spikes to 19.22% as Inflation Fuels Selloffs
Investors reduced interest in Nigerian government bonds has nudged the average yield higher by 12 basis points to 19.22% in the secondary market after selloffs seen across standard maturities.
The market has been trading on a bearish note following inflation rate direction latest reversal, which expanded negative interest yield on government borrowing instruments in the debt market.
The Debt Management Office has kept yield subdued as part of efforts to stem Nigeria’s debt services costs as Bonds accounted from significant chunk of pension assets.
Bond supply via primary market auction has reduced due to initial frontloading amidst weak liquidity in the financial system. Spot rates at bonds auctions has been on decline as subscription level remained impressive, relatively allowing the authority to reprice rates.
In the secondary bond market, benchmark yield increased on Wednesday with selloffs across the short-end (+6 bps), mid-segment (+15 bps), and long-end (+17 bps) of the curve.
Notable declines were seen in the JUN 38 (+156 bps), FEB 31 (+57 bps), and JUL 30 (+43 bps) instruments, CardinalStone Limited said in a note. As a result, average yields rose by 12 bps, settling at 19.22%.
There was significant interest in the May 2033 papers, which traded between 20.95% and 21.00% before settling at 20.80% due to renewed investor interest, AIICO Capital Limited told investors in a note.
Bondholders sold off interest APR-2029, which lifted its yield by 12 bps, and FEB-2031 bond was also offloaded, causing it yield to rise by +57bps while yield remained flat at the long end due to inactivity. #Bond Yield Spikes to 19.22% as Inflation Fuels Selloffs
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