FGN Bond Yield Nears 13% over Sell Pressure
Patience OnIha, DMO Boss

FGN Bond Yield Nears 13% over Sell Pressure

The Federal Government of Nigeria (FGN) bond experienced selling pressure in the secondary market, a bearish pattern has been formed over the past weeks, causing the average yield curve to shift upward.

Meanwhile, trading activities on the Nigerian Treasury bills ended cold, and quiet in the secondary market while financial system liquidity has improved. At the close of the trading session on Wednesday, the average yield on FGN bond is already nearing 13%, 100 basis points below the benchmark interest rate clouded by a running inflation rate.

Traders told MarketForces Africa that a positive net liquidity position in the financial system has triggered a slowdown in money market rates. It appears there is enough liquidity as the average interbank rate declines.

Data from the FMDQ Exchange platform shows that the open buy back and the overnight lending rate recorded a decline again. The overnight policy rate (OPR) closed 100 basis points lower to 8%.

Also, the overnight lending (O/N) rate contracted by 100 basis points to 8.7%, a level that Cordros Capital analysts attributed to the absence of any significant funding pressure. READ: Naira Depreciates over Weak Foreign Currencies Supply

Again, the Treasury bills secondary market traded quietly as the average yield was unchanged at 7.8%. Similarly, the average yield closed flat at 11.1% in the open market operations (OMO bills) segment.


Meanwhile, in the secondary market for FGN Bonds, trading activities ended with a bearish sentiment. With the pattern of proceedings observed in the space, the average yield expanded by three basis points to 12.7%.

Across the benchmark curve, market analysts at Cordros Capital Limited said in its market note that the average yield expanded at the short (+5bps), mid (+2bps), and long (+2bps) segments.

Bondholders/ market investors sold off the MAR-2024 (+29bps), APR-2032 (+7bps), and JUL-2034 (+12bps) bonds, respectively, according to the note. #FGN Bond Yield Nears 13% over Sell Pressure

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