Bonds Yield Prints at 14.6%, Naira Steadies

Bonds Yield Prints at 14.6%, Naira Steadies

The average yield on the Federal Government of Nigeria, FGN, debt instruments inched higher to 14.6% amidst the ongoing yield repricing in the fixed income space.

While inflation and falling naira remain downside, the market still awaits fresh catalysts that will force an upward movement in the yield curve and close the existing gap in real return.

At the investors’ and exporters’ foreign exchange window, the naira holds its position against the United States dollar.

The naira traded steadied at N445.50 while the black market rates were under check from further worsening.

As liquidity position in the money market Stabilises, which is an improvement from October 2022 record levels, short-term rates continues to stay in the single-digit range, according to data from FMDQ Exchange.

MarketForces Africa reported that opening market liquidity printed at N470.1 billion on Friday, thus keeping overnight and repo rates within a range of 7% – 9%. READ: FGN Eurobond Yield Prints at 10.5%, T-Bills, Local Bonds Steady

Analysts’ reports indicated that system liquidity improved primarily due to the combination of FAAC disbursement from the prior week and inflows from OMO maturities.

On Monday, the overnight lending rate was unchanged at 8.8%, as system liquidity settled at a net long position of N351.13 billion. In its market report, Coronation Research expects rates in the money market to trend upwards.

It said projected inflow from Nigerian Treasury bills and OMO bill maturities as well as an FX retail auction refund may not be sufficient to offset potential combined outflow from an FX auction, OMO auction and possible CRR debit by the Central Bank of Nigeria this week.

Trading activities in the secondary market for Nigerian Treasury bills ended with mixed sentiments yesterday, albeit with a bullish tilt. Traders and market analysts stated that the average yield pared by a basis point to 11.1%.

Across the curve, Cordros Capital stated that the average yield contracted slightly at the short (-1bp), mid (-1bp), and long (-1bp) segments.

The result was due to mild interest in the 17-day to maturity (-1bp), 129-day to maturity (-1bp), and 353-day to maturity (-2bps) bills, respectively. Similarly, the average yield pared by a basis point to 10.2% in the OMO bills segment.

Proceedings in the FGN bond market were bearish, as the average yield expanded by 12 basis points to 14.6%.

Across the benchmark curve, market analysts said the average yield expanded at the short (+33bps) end due to profit-taking on the APR-2023 (+197bps) bond. The average yield closed flat at the mid and long segments. # Bonds Yield Prints at 14.6%, Naira Steadies

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