Investors Trim Interest in Nigeria Bonds ahead of Inflation Data

The average yield on Federal Government of Nigeria (FGN) bonds increased as market participants in the fixed income market rebalance their portfolio ahead of inflation data. The selloffs on government bonds lifted the benchmark yield by 2 basis points, according to traders as National Bureau of Statistic is set to release inflation data for April, 2024.

Inflation rare accelerated to 33.20% in March, marking 30-year high reading due to macroeconomic dislocations, part of which was driven by reform – especially the decision of Nigerian government to remove expensive subsidies on petroleum.

According to fixed interest securities traders, sell pressures were observed at the mid-end of the curve (+10bps). Bond holders sold APR 32 FGN paper, causing its yield to rise +37bps.

There was selloffs on JUN 33 FGN, which resulted in 24bps increase its associated yield line. FEB 34 FGN Bond yield rose +17bps due to sell pressures. Conversely, the average yield declined at the long (-2bps) end driven by interests in the MAR-2050 (-15bps) bond.

Subsequently, average yields increased by 2bps to settle at 18.64%. In the money market, there was liquidity pressures. The financial market was confronted with funding pressures, which lifted the benchmark short term interest rate elevated.

For inter-bank rates, open repo and overnight lender rates increased by 83bps and 98bps to close at 29.69% and 30.59%, respectively, accor4ding to data from FMDQ Securities Exchange platform. Naira Loses Shine, CBN Calls Meeting as Exchange Rates Worsen

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