Bonds Yield Rises to 12.17% as Naira Sinks
The average yield on Federal Government of Nigeria (FGN) bonds rise to 12.17% on Tuesday, up 15 basis points from the previous close due to sell pressures that greeted the local debt capital market amidst weak liquidity in the financial system.
Short-term rates adjusted upward again after Monday’s moderation pressures mounted on the financial system liquidity again. Market data indicates that the average interbank rate inched upward by 442 basis points to close at 14.67% from 10.25% on Monday.
This culminated from an increased seen open buy-back rate which climbed by 433 basis points to close at 14.33%, from 10% yesterday when it declined by 475 points. Also, the overnight lending rate jumped up by 450 basis points to 15.00%, respectively with trading activities in the treasury bills market staying on a quiet note.
Similar to yesterday’s thin transactions, the secondary market for trading Nigerian Treasury bills ended on a quiet note on Tuesday. Lower transaction levels in the space kept the average rate at 7.7%. Elsewhere, traders said the average yield contracted by 3 basis points to 9.6% in the open market operations (OMO bills) segment.
In its market note, Alpha Morgan Capital hints that activities in the FGN Eurobond space were somewhat calm with a bearish nuance in today’s trading session. READ: Market Return Sinks over Sustain Selloffs on NGX
This resulted in an upward adjustment as the average rate was seen at 8 basis points above yesterday’s level to close at 12.36%. The average rate was down by 47 basis points to close at 12.28% Monday.
At the investors’ and exporters’ foreign exchange window, the Nigerian local currency, the naira depreciated by 0.4% to N430.67 per the United States dollar. Though, parallel market pressures moderated as Naira was sold at N695, from N715. #Bonds Yields Rise to 12.17% as Naira Sinks