Nigeria Bond Yield Rises to 14.47%
The average yield on the Federal Government of Nigeria (FGN) recorded a basis point increase to 14.47% on Tuesday following a thin trading transaction in the secondary market amidst racing headline inflation rate.
Traders reported that fixed interest securities investors stepped aside as most bond papers prices were unchanged as an untamed hot red headline inflation rate of 26.72% in September 2023 exposed a return on naira assets.
Compared with the level of inflation, rates on government remain a bad investment for individuals seeking to remove inflation exposures on wealth. The Nigerian government is borrowing below the market rate in the bond market having price-down spot rates on papers.
The market weighed the authority’s reaction to dwindling macroeconomic conditions as Nigeria obtained a $1.5 billion loan from the World Bank to support government finances. According to investment analysts at CardinalStone, bond instruments witnessed sell-offs on the June 2053 paper with a yield appreciation of 24 basis points to 16.55%.
Last week, the FGN bond secondary market traded quietly as the average yield remained at 14.4%. Across the benchmark curve, analysts said the average yield pared at the short (-1bp) end following interest in the MAR-2024 (-3bps) bond.
Meanwhile, the average yield closed flat at the mid and long segments, according to fixed income market analysts’ reports. Selloffs paused on major naira assets due to solid liquidity levels that continue to drag funding rates lower.
Pension and fund managers held to naira assets despite the fact that the consumer price index worsened, and analysts said currently, there is no end in sight. Key reforms undertaken is having negative impacts on economic performance.
Yesterday, activity was on a cautious thread, as the value of the plain vanilla closed flat for all maturities. Traders said there was mixed sentiment across the market which kept the average yield in the bond market mildly positive.
In Nigeria’s Eurobonds market, there was sustained bearish momentum across all maturities at the start of the week, characterized by the declines in the value of the Sovereign FGN instrument. Meanwhile, the average secondary market yields closed negative by 9bps primarily driven by sell sentiment. #Nigeria Bond Yield Rises to 14.47% Naira Devaluation Deepens Economic Crisis in Nigeria
