FGN Bond Yield Backtracks as Demand Spikes

FGN Bond Yield Backtracks as Demand Spikes

The average yield on the Federal Government of Nigeria’s (FGN) bonds declined in the secondary market as demand from assets and portfolio managers spiked on Tuesday.

Market analysts projected that yields would be up this week on expected liquidity strain in the financial system.  In 2023, the local debt capital market has been upbeat with increased demand for government securities, forcing the yield curve to drop despite higher inflation readings.

Traders said trading in the FGN bond was bullish as local investors seek to lock in funds in gilt-edge instruments amidst rising uncertainties about economic growth in the first quarter of 2023.

Consequently, the average yield contracted by 3 basis points to 13.0%. Across the benchmark curve, analysts at Cordros Capital told investors via email that the average yield declined at the short (-6bps) and long (-2bps) ends.

The decline was driven by investors’ demand for the APR-2023 (-17bps) and MAR-2050 (-6bps) bonds, respectively. Meanwhile, the average yield closed flat at the mid-segment.

The 10-year FGN Bond and the 30-year debts papers were 10 basis points and 6 basis points richer, with their corresponding yields falling to 13.10% (from 13.20%) and 15.20% (from 15.26%), respectively, according to Cowry Asset Management report. 

According to analysts’ notes, 15- year and 20-year FGN bond yields remained stable at 14.80% and 15.88%, respectively amidst cold trading outings in the related tenored ahead of Saturday election.

Elsewhere, the value of the FGN Eurobond decreased for most of the maturities amid sustained bullish sentiment, according to Cowry Asset analysts. Then, the average secondary market yield increased to 12.38%. # FGN Bond Yield Backtracks as Demand Spikes

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