Investors Cash Out on Nigerian Bonds in Post-Auction Reaction
Portfolio investors took profit on Nigerian government bonds in the secondary market in post-main auction reactions along with the monetary authority’s decision on interest rates.
Ahead of the monetary policy committee decision, the Debt Management Office (DMO) has allotted approximately ₦583.52 billion across the 2030 and 2032 maturities at higher stop rates of 15.90% and 16.00%, respectively.
MarketForces Africa reported that the Central Bank of Nigeria (CBN) kept the interest rate on Treasury bills unchanged even after the statistics office announced a sharp headline inflation rate decline to 16.05% from 18.02%.
With the positive macro indicators movements, the market had anticipated that the CBN committee will sustain the monetary easing. Surprisingly, the benchmark interest rate was held at 27%, chasing 16.05% inflation.
Bonds traders exited their positions in the secondary market, while the equities market rebounded slightly as investors began to reassess their strategy to optimise their returns.
According to AIICO Capital, only slight yield movements were observed at the mid-segment of the curve, with the 15-May-2033 and 27-Apr-2032 bonds inching higher by 8 bps and 1 bp to 15.57% and 15.35%, respectively.
Fixed income market analysts reported that there were yield expansions at the mid (+7 bps) segment of the curve, while the long end of the curve remained muted. As a result, the average yield expanded by 2 bps to 15.48%.
Traders at Cordros Capital noted that the average yield expanded at the mid (+1 bp) segment, following the selloff of the JUN-2033 (+7 bps) bond, but was unchanged at the short and long ends.
