Bonds Yield Rises to 15.8% as Inflation Provokes Selloffs
The benchmark yield on Nigerian government bonds rose moderately to 15.8% as fixed income investors in the secondary market sold down naira assets in reaction to the negative inflation report.
The headline inflation rate surged to 29.90% in January, according to an official statement Statistics Bureau. In their separate forecasts, investment banking firms estimated that in February report, the consumer price index would cross 30%.
At the close of trading, the average yield expanded by 24 basis points to 15.8%, according to Cordros Capital Limited. Traders said across the benchmark curve, the average yield increased at the short (+43bps), mid (+49bps) and long (+5bps) segments. The yield on short FGN bonds rose by 43 basis points as investors exited positions.
The same development lifted yield at the belly of the curve by 49 basis points while there was a moderate uptick of 5 basis points on long-dated FGN bonds assets. This was attributed to profit-taking activities on the JAN-2026 (+256bps), APR-2032 (+105bps) and JUN-2038 (+33bps) bonds, respectively.
In the money market, liquidity pressure eased moderately. The Nigerian interbank borrowing rates trended lower across all tenor buckets reflecting an improvement in the liquidity system, said Cowry Asset Limited. Notably, the interbank rate declined by 0.94% to close at 16.06%. In the same manner, the 1-month, 3-month and 6-month NIBOR decreased by 0.50%, 0.50% and 0.22%, respectively.
However, key money market rates, such as the open repo rate (OPR) and overnight lending rate (OVN) surged to conclude at 15.61% and 16.29%, respectively. #Bonds Yield Rises to 15.8% as Inflation Provokes Selloffs Supreme Court Voids AMCON Takeover of Lagos Hotel
