Nigeria Bond Yield Rises to 14.14%

Trading activities in the secondary market for Federal Government of Nigeria (FGN) bonds ended on a bearish. This pushed the average yield to 14.14%, according to traders’ notes.

The selloffs that greeted the bond market continued into the New Year, dragging the average yield on the borrowing instruments downward.

Asset and portfolio managers’ selloffs came amidst an expectation that the economy will be redirected to enhance growth in 2024. However, the market remains sceptical, especially with the rising inflationary trend.

Inflation remains downside on the macroeconomic indicators side, analysts told MarketForces Africa while reacting to expectations for the New Year. For November reading, headline inflation settled at 28.2% year on year and analysts expect the consumer price index to worsen further.

Based on the temperature in the bond market, investors maintained their expectations that a higher return is deserved for parting with their funds. Currently, the gap between portfolio returns and inflation has widened.

Investors are earning negative yields on FGN bonds, though demand for these instruments remained solid throughout 2023 in the primary market auction conducted by the debt management office.

Data from the market showed that there was slight negative trading activity as the average yield inched higher by a base point to close at 14.14%.   Naira Devaluation Deepens Economic Crisis in Nigeria

In Nigeria’s sovereign Eurobonds market, sell sentiment prevailed across the short, mid and long ends of the yield curve, causing a mild 10bps increase in the average yield to 9.72%.