Bonds Yield Falls to 20% as Market Reacts to Inflation
The average yield on Nigerian government bonds reduced to 20% following buying momentum witnessed in the secondary market. Investors were active in the fixed income market following the release of the Nigeria January 2025 consumer price index reading, analysts at CardinalStone Limited said in an investors’ note.
Real return on fixed interest securities has become 3.02% positive on the back of a lower inflation rate of 24.48% , and much higher benchmark interest rate of 27.50% ahead of monetary policy meeting.
Nigeria’s headline inflation rate moderated to 24.48% year on year after a rebasing exercise by the statistics office, from 34.80% in December. The National Bureau of Statistics (NBS) released its January 2025 inflation reading following the completion of its previously announced CPI rebasing exercise.
The report placed inflation for January 2025 at 24.5%, while core inflation moderated to 22.6% from 29.3% in December while food inflation printed at 26.1% from 39.8% in December 2024.
Bullish sentiments were prevalent at the short end and mid-segment of the curve, particularly at the 2027, 2029, and 2033 FGN bonds. Average yields contracted by 21 bps to settle at 20.03%, analysts said in a separate report.
Across the benchmark curve, the average yield declined at the short (-31 bps) and mid (-2bps) segments due to interest in the MAR-2027 (-75bps) and JUL-2030 (-30bps) bonds, respectively, but remained unchanged at the long end.
Buying interest was observed at the short and mid segments of the yield curve, with intense focus on the mid-term instruments. For context, traders reported that the 2035 FGN bonds yield declined by 95 bps to close on bid at 20.55%.
At the short end, the 2029 and 2031 papers represented the bulls with modest buy interest. #Bonds Yield Falls to 20% as Market Reacts to Inflation Yield on Nigerian Treasury Bills Falls ahead of Rebase Data
