Bonds Yield Rises to 14.5%, Treasury Bills Pops
The fixed income market yield curve swings again as gilt-edge investors sold off a sizeable amount in their Federal Government of Nigeria (FGN) instruments – both bonds and Nigerian Treasury bills.
In the secondary bond market, the values of plain vanilla FGN bonds were largely flattish, traders at Cowry Asset Management said in a market report.
According to market analysts, fixed interest securities investors traded near the front end of the naira yield curve, with the 23 Feb 2028 and 17 Mar 2027 debt instrument yields rising by 0.31 and 0.18 percentage points, respectively.
As a result, the average secondary market yield expanded by 0.02 percentage points to 14.47% amid renewed bearish sentiment, according to Cowry Asset Management note.
Across the benchmark curve, traders said the average yield expanded at the short (+10bps) end due to profit-taking activities on the FEB-2028 (+31bps) bond but was unchanged at the mid-segment.
Conversely, the average yield contracted at the long (-3bps) end as investors demanded the APR-2037 (-21bps) FGN bond. READ: NGX Pops as Investors Position in Fundamentally Strong Shares
Cowry Asset traders said the value of the FGN Eurobond gained across all maturities tracked as the average yield contracted by 0.19 percentage points to 14.12% amid purchase interest.
In the money market, pressures on short-term rates moderated significantly after record inflow into the financial system that raised liquidity levels.
The overnight lending rate contracted by 533 basis points to 9.8% as the financial system received N20 billion inflow OMO maturities, according to Cordros Capital analysts’ note.
As a result of improved liquidity, market analysts hint that deposit money banks with liquidity requested lower rates, even as the open buyback rate and the overnight lending rate fell below double digits to 9.33% and 9.83%, respectively.
In the Treasury bills secondary market segment, trading activities were bearish, as the average yield expanded by 9 basis points to 11.1%.
Across the curve, Cordros Capital analysts reported that the average yield was flat at the short end but contracted at the mid (-40bps) segment following demand for the 177-day to maturity (-261bps) bill.
Conversely, traders noted that the average yield expanded at the long (+8bps) end due to a sell-off of the 359-day to maturity (+15.33ppts). Elsewhere, the average yield was flat at 10.2% in the OMO bills segment, analysts told clients in an email. #Bonds Yield Rises to 14.5%, Treasury Bills Pops