Nigeria Bonds Mixed, 30-Year Debt Sees Sell Pressure
The average yield on the Federal Government of Nigeria (FGN) bonds moved in a mixed direction amidst an uncertain economic outlook, spurred by sizeable liquidity levels and fund/asset managers’ appetite for risk-free debt instruments.
Despite rising interest and inflation rates, the yield on government instruments has been facing untold pressure with widening real return on investment across the fixed interest securities market.
Local law has been fuelling demand, stifling creative investment of the asset managers, a trader told MarketForces Africa, noting that despite the monetary authority response to inflation sure, asset pricing has remained downbeat.
Pension fund managers are, by law, required to invest a large chunk of pension assets in government bonds, creating a ready market for Nigeria to raise borrowing, often below market rates.
In the bond market, the value of FGN bonds was largely flat for most maturities, Cowry Asset Limited said in a note to investors. Traders noted that the average yield in the secondary market remained unchanged at 13.47%.
Notably, the 20-year bond was 5 basis points richer, while its corresponding yield contracted by a basis point to 15.42%. Meanwhile, the 30-year debt was 66 basis points cheaper, yielding 15.68% from 15.58%.
The 10-year, and 15-year FGN bond yields held steady at 12.09% and 14.81%, respectively with only a handful of trades passing through.
Across the benchmark curve, Cordros Capital Limited said in a note that the average yield closed flat at the short and mid segments but expanded slightly at the long end due to the selloff of the MAR-2050.
TrustBanc Capital Limited said in its note to investors that the Mar-2050 maturity faced sell pressure, as the far-dated security saw yields climb by 10 basis points.
Elsewhere, the value of the FGN Eurobond closed lower for most maturities on sustained bearish sentiment; consequently, the average secondary market yield expanded to 11.66%. #Nigeria Bonds Mixed, 30-Year Debt Sees Sell Pressure