FGN Bond Yield Tracks Lower as Naira Appreciates

FGN Bond Yield Tracks Lower as Naira Appreciates

The average yield on the Federal Government of Nigeria (FGN) bond tracks lower on Tuesday amidst a relatively cautious trading session in the fixed income market. With the lukewarm market position, the Treasury bills segment also saw a thin trading session – the same pattern seen at the open market operations market.

Naira appreciates in the investors’ and exporters’ foreign exchange (FX) window after the local currency fell to N419 on Monday. Gaining about 0.2% on Tuesday, the foreign exchange rate printed at N418.25 to a United States dollar amidst uncertainties around the CBN governor’s presidential ambition.

In the money market, improved liquidity in the financial system brought down short term rates. The average interbank rate declined as both open buy-back and overnight lending rates dipped, according to data obtained from the market.

Data from FMDQ Exchange cited by traders shows that the overnight lending rate contracted by 133 basis points today to 5.0%. The decline was attributed to a N38.08 billion inflow from OMO maturities that hit the financial system.

Meanwhile, trading activities in the Treasury bills secondary market were mixed, albeit with a bullish bias, according to Cordros Capital market note. Traders quoted that the average yield pared by a basis point to 3.7%. Across the curve, the average yield was flat at the short and mid segments but contracted at the long (-2bps) end.

This was due to demand for the 261 days to maturity (-11bps) bill. Elsewhere, the average yield was flat at 4.1% in the open market operations (OMO bills) segment, according to Cordros Capital analysts note.

In the bond market, trading activities on FGN instruments was also mixed, but with a bullish bias, as the average yield contracted slightly by 2bps to 11.1%. READ: FGN Eurobond Yield Prints at 10.5%, T-Bills, Local Bonds Steady

Traders said across the benchmark curve, the average yield dipped at the short (-2bps) and long (-4bps) ends as investors demanded the JAN-2026 (-11bps) and MAR-2050 (-10bps) bonds, respectively; the average yield closed flat at the mid-segment. #FGN Bond Yield Tracks Lower as Naira Appreciates