Nigeria Bonds Yield Rises 97bps to 14.8% - MarketNews

The average yield on Nigerian government local bonds rose by 97 basis points to 14.8% in the secondary market due to selling pressures that followed the monetary authority’s regulatory actions. The yield adjustment followed the debt management office’s N418 billion raised at the primary market auction last week.

A total of 52,338 bonds valued at N51.123 million were traded this week in 31 deals compared with 98,426 units valued at N95.304 million transacted last week in 60 deals, Cedrus Group Africa said in a report.

The Nigeria financial market volatility extended following the apex bank’s 24-hour foreign currency holding sell-down request from local lenders. Recall that the debt office launched primary market auction sales in 2024, recording higher subscriptions.

Reacting to new market dynamics ahead of interest rate hike expectations, funds and asset managers adjusted swiftly with selloffs on naira assets. This shifted the yield curve and prices of government bonds nosedived.

In an update, Cordros Capital Limited told investors that the average yield advanced across the short, mid, and long segments. As a result of sell pressure, short-tenor instruments recorded a 172 basis points increase in yield and long-dated instruments saw yield surged 63 basis points.

At the belly of the curve, the yield rose by 72 basis points.  The surge was propelled by profit-taking activities on the MAR-2024 (+396bps), APR-2029 (+134bps), and JUN-2038 (+223bps) bonds.

At the primary market auction conducted by the debt office, it offered instruments worth N360.00 billion to investors through re-openings of the 16.29% FGN MAR 2027, 14.55% FGN APR 2029, 14.70% FGN JUN 2033 and 15.45% FGN JUN 2038 bonds.

2027 FGN bonds recorded a bid-to-offer of 1.9x at a 15.00% spot rate, and 14.55% FGN APR 2029 achieved a bid-to-offer of 0.6x at a 15.50% spot rate. Also, 14.70% FGN JUN 2033 witnessed a bid-to-offer of 0.8x with a 16.00% stop rate, and 15.45% FGN JUN 2038 delivered a bid-to-offer of 3.5x with a stop rate of 16.50%

Traders reported that subscription level or demand was lower across the four instruments as the total subscription level settled at N604.56 billion as against N886.41 billion achieved in the previous auction.  DMO allotts bonds worth N418.20 billion, translating to a bid-to-cover ratio 1.5x. #Nigeria Bonds Yield Rises 97bps to 14.8% – MarketNews#

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