FGN Bonds Worth N290 Bln Matures Next Week
The value of the Federal Government of Nigeria (FGN) bond in the secondary market has been projected to rise next week as the N290 billion worth of 10-year notes mature. The inflow will hit the financial system, causing bond prices to rise while yields are expected to decline.
With the headline inflation rate increased to 15.63%, return on fixed income instruments have reduced further as the market awaits the outcome of policy authority meeting on benchmark policy rates.
This week, the fixed income market generally traded on a calm note ahead of the Central Bank of Nigeria (CBN) monetary policy committee (MPC) meeting on Monday and Tuesday next week.
During the week, the Debt Management Office (DMO) allotted N170.64 billion worth of Federal Government of Nigeria bonds, the first primary market auction (PMA) conducted in the new year.
The largely oversubscribed reopening and new issuance were then split as N81.76 billion for the 12.50% FGN JAN 2026 and N88.92 billion for the 13.00% FGN JAN 2042, according to auction results.
Stop rates for JAN 2026 fell to 11.50% from 11.65% while JAN 2042, a new issue, was done at a stop rate of 13.00%, according to DMO Auction results.
In the secondary market, analysts at Cowry Asset noted that fixed income instruments investors were strongly bullish as the value of FGN bonds traded northward for most maturities tracked.
Specifically, the prices of 10-year, 16.29% FGN MAR 2027 paper and 20-year 16.25% FGN MAR 2037 debt gained N0.35 and N0.76. Thus, these instruments see their corresponding yield falling to 12.11% (from 12.20%), 12.85% (from 12.95%) respectively.
But, the 15-year 12.50% FGN MAR 2035 bond and the 30-year 12.98% FGN MAR 2050 instrument traded flattish at 12.90% and 13.11% respectively. Read: Bonds Yields to Decline Further on Expected Liquidity Boost
Elsewhere, the value of FGN Eurobonds traded at the international capital market appreciated for all maturities tracked on renewed bullish sentiment.
The 10-year, 6.375% JUL 12, 2023 bond, the 20-year, 7.69% FEB 23, 2038 paper and the 30-year, 7.62% NOV 28, 2047 debt gained USD0.60, USD2.40 and USD3.02 respectively, according to a note from Cowry Asset.
Analysts also spotted that consequent to the gain recorded, their corresponding yields decreased to 3.93% (from 4.39%), 8.88% (from 9.19%) and 8.85% (from 9.19%) respectively.
In the new week, analysts expect the value of FGN Bonds, especially for longer maturities to increase (and yields to fall) as the N290 billion FGN 10-Year bond matures next week.
