Nigeria Bonds Benchmark Yield Rises to 13.6%
Benchmark yield on Federal Government of Nigeria (FGN) bonds increased by 3 basis points to 13.58 per cent as a result of fresh selloffs in the secondary market. The slide in bonds came as investors’ moods switched amidst the rising inflation rate.
Analysts are already predicting further hikes in benchmark interest rates as the apex bank plans to resume monetary policy committee meetings in February. The MPC is expected to maintain a tight policy stance and increase the policy rate by 300 basis points to 21.75% – the highest point on record since data compilation started in 2006
According to analysts, the headline inflation rate is already approaching 29%, reducing the return on investment across the fixed income securities market. Amidst the continuous rally in the equities market, bears took over the bond market, shifting the yield curve upward. In the secondary market, the average yield advanced by 3bps to 13.5%.
Across the benchmark curve, Cordros Capital Limited said the average yield contracted at the short (-2bps) end as investors demanded the JAN-2026 (-40bps) bond. However, the yield curve expanded at the long (+7bps) end as market players sold off the JUN-2038 (+60bps) bond. Conversely, the average yield was flat at the mid-segment.
In its outlook for 2024, Cordros Capital revealed that it expects that the average yields on Treasury bills and bonds will settle at about 12.0% and about 16.5% by the end of the year. The fixed income market should remain characteristically volatile in 2024 as a combination of factors should pressure market yields upwards and downwards intermittently, analysts predicted.
The demand-supply imbalance is expected to be the outsize driver of market activities as supply levels will remain significant given the government’s borrowing needs. #Nigeria Bonds Benchmark Yield Rises to 13.6% FAAC Disburses N1.1trn Allocation to FG, States and LGs
