Fixed Income Investors See Yields Jump in Short, Mid-Tenor Bonds
Federal Government Bond market sees yields uptrend on Tuesday trading session as yields on debt instruments jumped but with a slowdown in the long-dated end of the curve. On the other hand, Treasury bills recorded a yield slowdown amidst improved liquidity in the financial system.
Specifically, activities at the bond secondary market were somewhat mixed following a 42 basis point increase and 3 basis points jump at the short and mid ends of the curve.
Meanwhile, the long end of the curve declined slightly by 1 basis point. Consequently, the average yield climbed by 8 basis points to close at 11.43% on Tuesday.
In the money market segment, robust liquidity in the system impacted positively on short term rates. According to Alpha Morgan Capital, the average interbank rate dropped by 88 basis points to 14.88%.
Data from the FMDQ Exchange platform showed there was a 100 basis points decline in both the Open Buy Back rate while the Overnight lending rate plunged by 75 basis points to close at 14.50% and 15.25%, respectively.
Market data shows that activities at the Nigerian Treasury bills secondary market traded on a quiet to bullish note. This was attributed to flatness recorded at both the short and long ends of the curve. Meanwhile, the mid-end of the curve dropped by 4 basis points which then drive the average yield lower by 2 basis points to close at 5.50%.
Across the benchmark curve, Cordros Capital analysts said the average yield was unchanged at the short and long ends but contracted at the mid (-9bps) segment due to investors’ demand for the 184 day to maturity (-52bps) bill.
Similarly, the average yield at the open market operations (OMO segment declined by 11bps to 6.4%. Elsewhere, the average yield on Federal Government Eurobond slopped downward by 4 basis points to close the day at 6.5%.
Analysts at Alpha Morgan Capital said activities at the Eurobond market actually traded on a bullish note. The trading pattern resulted following contractions across all instruments except the Jun-2022 and Jul-2023 instruments that remained flat. #Fixed Income Investors See Yields Jump in Short, Mid-Tenor Bonds
Read Also: Fixed Income Market Sees Yields Decline as Liquidity Pressures Ease
