Nigeria Bonds Yield Settles at 19.41% ahead of Inflation
The average yield on Federal Government of Nigeria (FGN) bonds settled at 19.41% in the secondary market after mixed trading sessions last week ahead of inflation data.
Trading activities have been subdue amidst slowdown in local bonds supply. The Debt Management Office (DMO) has reduced monthly bond offers by 50%, from N360 billion lots size to N180 billion.
This has spurred oversubscriptions, with pension fund administrators and banks betting large on government debt securities, though inflation costs has always dampened portfolios returns.
Inflation, which recently reversed downtrend, is expected to worsen throughout the remaining part of the year. Markets projection was anchored on energy price surge which has driven logistics costs higher with immediate negative impacts on food index.
While investors look forward to inflation rate for Oct, the Nigerian bonds market experienced fluctuating trading patterns, with mixed sentiments at the beginning of the week, traders said.
However, it turned bearish following the OMO and Treasury auctions, especially due to the rise in stop rates at the main auction, TrustBanc Capital Limited hints investors in a note.
Analysts said buying interest was primarily focused on the Feb 2031, May 2033, Feb 2034, and Jun 2053 papers, causing their respective yields to contrast.
The market saw yield adjusted as analysts observed muted trading trend throughout the week. On Friday, the average benchmark yield edged on mild selloffs spurred by riskoff sentiment.
At the latter part of the week, traders however noted that some sell side actors in the secondary market sold modest volumes at the mid to long ends of the curve.
This reflected investors’ adjustments to rising rates and the huge deficit in the financial system, AIICO Capital Limited said in a note, added that buying interest was primarily concentrated at the short end.
The average benchmark yield remained steady at 18.95% week-on-week. We anticipate that the quiet trading environment will continue into next week. #Nigeria Bonds Yield Settles at 19.41% ahead of Inflation Equities Investors Wealth Rises as Nigerian Exchange Rally
