Investors Soften on Nigerian Bonds Ahead of Inflation
In the secondary market, the Nigerian local bonds market traded softly on the back of cautious mood ahead of inflation data. The statistics office is yet to release inflation report for January, a delay attributed to the consumer price index data rebasing agenda.
The market opened on a flattish note. However, buying interests were observed at the mid (-3bps) segment, particularly on the JAN 2035 (-10bps) and FEB 2031 (-7bps) papers. Analysts reported that few trades were executed on the mid-tenor papers, especially the February 2031 and January 2035 maturities.
Due to the trading pattern, the average yield closed flat at 20.0%. Across the benchmark curve, the average yield decreased at the mid (-2bps) segment, according to Cordros Capital Limited.
The 2031s and 2035s saw modest declines of 13bps and 10bps, settling at 21.45%. Despite the measured optimism, the overall market held its ground, keeping average benchmark yield unchanged.
The yield contraction driven by interest in the FEB-2031 (-7bps) bond, while it closed flat at the short and long ends. Analysts said the consumer price index which is expected to be release by the statistics office will guide market direction.
Consumer prices are poised to moderate in the near term, primarily driven by a high statistical base in the previous year, a lower exchange rate pass-through following stability in the naira and lower increases in energy prices, Cordros Capital Limited said in a note.
Using the current methodology (2009 base year), analysts estimate the headline to ease by 50bps to 34.30% y/y in January from 34.80% in December, 2024.
Additionally, the weight adjustment in the inflation basket under the proposed inflation methodology (2024 base year) could induce a steeper fall in inflation. #Investors Soften on Nigerian Bonds Ahead of Inflation Yield on Nigerian Treasury Bills Falls ahead of Rebase Data
