Federal Govt. of Nigeria Bond Yield Prints at 12.37%
Patience Oniha, Director-General, Debt Management Office

Federal Govt. of Nigeria Bond Yield Prints at 12.37%

Activities at the Federal Government of Nigeria (FGN) secondary market traded on a bearish note as average yield expanded by 44 basis points to close at 12.37%, according to Alpha Morgan Capital in a report.

In general, the Nigerian debt market is witnessing rates re-pricing that has effectively pushed government borrowing costs higher amidst rising inflation rate.

Fixed income market investors have been recording negative return on investment due to low interest rate environment that has been trailing inflation rate readings for 19 consecutive months.

However, the spill down effect of a recent increased in rates at United States Treasury Bonds seem to have ended what some fixed income analysts called financial repression.

This week, the local bond market sustained its bearish momentum with sell interest across the curve as investors continue to wait on the sideline in anticipation of the next bond auction slated for 19th May 2021.

Afrinvest limited said consequently, average yield rose 44 basis points to 12.3%, noted that there were sell-offs across tenors with the medium-end of the curve advancing the most as yield inched higher by 59 basis points week on week.

It was also noted that yields on short and long-end of the curve rose 49 basis points and 22 basis points week on week respectively.

Money Market: Secondary T-bills Market Extends Bearish Performance

In the money market, the open buy back and overnight rates declined week on week. In spite of the ₦30.0 billion open market operations maturities on Tuesday, the system liquidity fell to ₦225.8 billion from ₦275.0 billion.

Consequently, the open buy back and overnight rates closed the week lower, down 12.8 and 12.5 percentage points to settle at 14.8% and 15.3% respectively from 27.5% and 27.8% from the previous Friday.

Similarly, in the treasury bills secondary market, performance was also bearish as average yield rose 25 basis points week on week.

Across the market, the short-end of the curve remained flat, the medium-end of the curve rose by 77 basis points while the long-end of the curve fell mildly.

“In the coming week, we suspect that the CBN may conduct an open market operations auction as maturities of ₦90.0 billion will impact system liquidity levels.

Bond Market Records Increase in Average Yield to 12.72%

“Ultimately, we expect rates to remain in the same band in the secondary T-Bills market”, Afrinvest stated.

Federal Govt. of Nigeria Bond Yield Prints at 12.37%