FGN Bonds Rally, Nigerian Eurobond Yield Rises
Local investors in the debt capital market increased buying momentum on Federal Government of Nigerian (FGN) bonds even as inflation pressures continue to have a bearing on real return on naira assets.
Following Debt Management Office (DMO) monthly auction showing mixed sentiment, the FGN Bond market has been trading cool and albeit with a bullish bias driven in part by improved liquidity level in the system.
Yesterday, local investors submitted bids for short-dated maturities, according to traders, noting that positions were taken especially on the 2027 FGN Bond which shed 21 basis points.
At the far end of the benchmark curve for Mar-50 FGN bonds slide a basis point amidst paltry transactions record seen in the secondary market. Accordingly, the average yield cleared 2 basis points lower to 14.31%.
The 10-year FGN debt was 60 basis points richer, yielding 12.73% (from 12.94%), Cowry Asset Managers told investors in a report. Traders noted that the 15-year, 20-year, and 30-year FGN bond yields held steady at 14.96%, 15.23%, and 15.84%, respectively.
Elsewhere, at the Eurobond segment, TrustBanc Capital Limited said the trading sentiment was mixed as foreign portfolio investors (FPIs) played on both sides. However, transactions detail has a bearish tilt as average yields popped higher.
Notably, traders said significant offers passed on the Jul-23 (+124bps) maturity submerged moderate bids registered across the benchmark curve maturities. Eurobond maturing in Nov-2047 rallied, causing the yield to decline 18 basis points.
The same pattern was witnessed on Eurobond maturing in Jan 2049 whose increased demand dragged yield down 17 basis points while Eurobond maturing Nov 2025 shed 14 basis points.
Analysts noted that the benchmark Eurobond yield jumped by 4 basis points to close at 13.18% while the 10-year US Treasury yield dipped by 10 basis points to close at 3.43%. #FGN Bonds Rally, Nigerian Eurobond Yield Rises
