Investors Hunt Nigerian Bonds Amidst Declining Yields
Investors’ activity in the Nigerian bond market remained subdued amid improving macroeconomic conditions, with mixed expectations for the inflation outlook amid the Middle East conflict.
The risk premium on Federal Government of Nigeria borrowing instruments continues to tighten, and investors are currently accepting relatively lower returns than on Treasury and OMO bills.
Suggesting an inverted yield curve, rates on short-term investment securities remain attractive relative to returns on local bonds across tenors.
Yesterday, the benchmark yield on Nigerian government bond declined by 2 basis points (bps) to 15.90%, driven mainly by selective demand in the short-to-mid end of the curve.
The buying interest in the secondary bond market reflects renewed domestic investor confidence and strengthening demand for naira-denominated sovereign debt.
However, Trading activity remained subdued as investors maintained a cautious stance, resulting in limited movements across most of the curve.
According to AIICO Capital, Nigerian bonds with 20-Mar-2028, 15-May-2033, and 21-Feb-2034 maturities saw slight buying interest, with their yields compressing by 1bp, 30bps, and 31bps to close at 15.94%, 16.39%, and 16.21%, respectively.
Meanwhile, a few papers experienced selloffs in the secondary market. FGN bonds with 21-Feb-2031, 27-Apr-2032, and 18-Mar-2036 maturities witnessed mild selling pressure, with yields expanding by 13bps, 16bps, and 10bps, respectively. #Investors Hunt Nigerian Bonds Amidst Declining Yields
