FGN Bond Yield Hits 10.9% as Naira Sinks

FGN Bond Yield Hits 10.9% as Naira Sinks

The average yield on federal Government of Nigeria (FGN) bond traded in the local market inched upward by five basis points as naira depreciates.

At the investors and exporters foreign exchange window, data obtained from FMDQ Exchange platform showed that the local current lost 0.1% of its opening value to close at N417 per United States dollar.

In the money market, pressures on financial system liquidity impacted short term rates. On Monday, the average interbank rate closed higher as both the open buy back and overnight lending rates inched upward strongly.

Market data shows that the overnight lending rate expanded by 200 basis points to 8.3%. Cordros Capital analysts said in market note that development was due to funding pressure on the system.

Largely, the fixed income market has trended on a cautious mode amidst high inflation rate in the country and low interest rate environment. Real rate on fixed income instruments has been weakened further by depreciation of naira.

Risk of keeping naira assets is high due to twin effect of a weak local currency and steep inflation reading, some investment banking firm told MarketForces Africa while expectation for further devaluation is on the table.

Trading activities in the Nigerian Treasury bills secondary market was quiet. The average yield was unchanged at 3.3% due to the thin trading. Similarly, the average yield was flat at 3.6% in the open market operations (OMO) segment.

Elsewhere, in the secondary market for FGN Bonds, trading activities ended on a bearish sentiments. The average yield expanded by 5 basis points to 10.9%. READ: Naira Sinks at Official FX Window as External Reserve Falls

Traders at Cordros Capital said across the benchmark curve, the average yield expanded at the short (+7bps), mid (+1bp) and long (+4bps) ends as investors sold off the JAN-2026 (+46bps), JUL-2030 (+3bps), and MAR-2035 (+16bps) bonds, respectively.