Investors Park Funds in Nigerian Bonds Ahead of Inflation
Demand for Nigerian government bonds on the rise amidst expectation that a move to rebase consumer price index will usher in monetary policy easing. Lower inflation figure would mean that the Central Bank of Nigeria (CBN) would temper hawkish position to drive economic growth.
“If the CBN eventually cut benchmark interest rate, the fixed income market assets will also be repriced – spot rates would started dropping to reflect new market dynamics’, analysts explained.
Hence, investors have continued to increased bets on fixed income market, with surging demand for bonds as well as treasury bills instruments.
On Tuesday, the market experienced another bullish momentum with sustained buying interest at the mid-segment of the yield curve.
Bullish sentiments dominated the secondary bond market, particularly at the short end (-31bps) of the curve, on the back of buy interests in the MAR 28 (-157 bps), MAR 26 (-94bps), and JAN 26 (-58bps).
Specifically, investors’ appetite for Jan-35 maturity drove the average benchmark yield down. On the other side, sell pressure dominated the Feb 2031 and Jan 2035 maturities as some investors aimed to lock in profits.
Across the benchmark curve, the average yield declined at the short (-7bps) and mid (-7bps) segments, Cordros Capital Limited stated in a note.
Analysts said the yield contraction was due to buying interest in the JAN-2026 (-58bps) and APR-2032 (-37bps) bonds, respectively. The average yield remained unchanged at the long end. Overall, the average yield contracted by 14 bps to 20.35%. #Investors Park Funds in Nigerian Bonds Ahead of Inflation#
