FGN Eurobond Yield Falls Four Basis Points to 7.54%
Patience Oniha, DG, DMO

FGN Eurobond Yield Falls Four Basis Points to 7.54%

Federal Government of Nigeria (FGN) Eurobond witnessed increased demand in the secondary market on Thursday, thus traders saw the average yield on the instrument declined by four basis points to 7.54 per cent.

Recall, the Eurobond market had previously witnessed selloffs that raise the average yield higher following the Russia-Ukraine conflict that disrupt the global financial markets.

Some analysts attributed rising demand for Eurobond to stability associated with foreign currencies denominated investment assets due to Nigeria’s weak local currency. Read: DMO to Auction More Bonds as Yield Falls

“It’s safe to keep investment assets in foreign currencies denominated instruments even with a moderate return at the end of investment period. It’s not unlikely to see further devaluation in Nigerian naira”, MarketForces Africa gathered from experts.

In the foreign exchange market, the naira remained flat against the United States dollar at the Investors and Exporters foreign exchange (FX) Window to close at N416.50. On Monday, the local currency opened at N416.

Rates continue to decline in the money market segment yesterday. According to data from FMDQ Exchange, the average interbank rate dropped by 12 basis points to close at 2.38% in the absence of funding pressures on the financial system liquidity. 

Alpha Morgan Capital said in a commentary note that the Open Buy Back rate held its prior position while the overnight rate dropped by 25 basis points to close at 2.00% and 2.75%, respectively.

On Thursday, activities at the Nigerian Treasury Bills secondary market sustained their bullish trend session, as traction was seen at the longer end of the curve. Fixed securities investors were demanding the Oct 22 & Feb 2023 papers. Consequently, the average rate dipped further to close at 3.38%.

Across the curve, Cordros Capital said most of the day’s activity was witnessed at the long (-15bps) end, as market participants’ demanded the 343 day to maturity (-109bps) bill; the average yield was flat at the short and mid segments.

Elsewhere, the average yield was unchanged at 3.3% in the open market operations (OMO Bills) segment, according to fixed income traders reports obtained by MarketForces Africa on Thursday.

Also, trading activities at the FGN bond secondary market held on to the bullish theme from previous sessions as average yield dropped by 19 basis points to close at 10.56% following demands on the 2024, 2025, 2031, 2035, 2045 and 2049 maturities.

Across the benchmark curve, specifically, the average yield contracted at the short (-17bps), mid (-38bps), and long (-9bps) segments due to buying interests in the MAR-2024 (-64bps), JUL-2030 (-153bps), and MAR-2035 (-54bps) bonds, respectively.

Traders said activities at the FGN Eurobond market was mostly bullish as buying interest was seen across the sovereign curve except for the Jun-2022 instrument that remained flat. In sum, the average yield was down by 4 basis points to close at 7.54%.

#FGN Eurobond Yield Falls Four Basis Points to 7.54%