Nigeria Bonds Yields Skid as Investors Raise Bets
The Federal Government of Nigeria (FGN) bonds rallied in the secondary market as investors continue to take large bets amidst elevated yields in the fixed income space. With expectation that inflation will cross 32% in March readings, investors are still hoping to see catalysts that will drive yield repricing to reduce negative interest yield on naira assets holdings.
The monetary authority recently adjusted benchmark interest rate to 24.75% to combat Nigeria’s ugly inflation conditions. Despite monetary policy tightening, experts believe that inflation will accelerate throughout the first half as market identified costs as major drivers for worsening price index.
In the secondary market for FGN Bonds, the average yield declined by 0.05% to close at 19.26% on Monday due to demand witnessed across tenors. Naira Slides as Nigerians Import Appetite Rises
Across the benchmark curve, traders at Cordros Capital Limited reported that the average yield pared at short (-1bp) and long (-10bps) end. The yield decline was caused by fixed interest securities investors demanded for FEB-2028 FGN bond, losing (-47bps. The market also recorded demand for FEB-2031 FGN bonds, which resulted to 17bps yield drop in the secondary market.
Meanwhile, the average yield closed flat at the long end, according to market updates reviewed by MarketForces Africa. In the foreign exchange market, The Naira strengthened by 1.63%, ending at ₦1,230.61 per dollar in the official market.
In the Parallel market, the Naira closed at ₦1,230 to the dollar. Meanwhile, there was a negative shift in oil prices, with Brent crude dropping by 1.49% to $89.81 per barrel, and WTI crude also declining by 1.39% to $85.71 per barrel. In Nigeria’s sovereign Eurobonds market, trading activity was mildly bearish, leading to a slight increase in the average yield by 0.01% to 9.59
