Nigerian Bond Yield Climbs to 19.56%
The local FGN bond market closed bearish, with selling interests on selected papers, especially 2031 and 2033 maturities, traders said in a separate notes.
As a result, the average yield increased by 9bps to 19.56% as market weighed interest rate hike along with the nation’s inflation trend.
Rates in the fixed income market has been subdued while inflation and interest rates are climbing. There is expectation that inflation will start to retreat in the second half of the year due to base effects on the figure.
The market anticipates that the recent monetary policy committee decision, which saw a modest 50bps increase in the monetary policy rate (MPR) to cause rate repricing in the fixed income market.
However, the more significant development was the expansion of the upper band of the MPR from +100bps to +500bps, signaling a potential for tighter system liquidity, Meristem Securities said in a note.
The widened upper band of the MPR opens the door for more aggressive liquidity management, potentially driving rates higher.
This is attractive for investors, particularly FPIs, as the prospect of higher yields could incentivise foreign exchange inflows, bolstering forex reserves and supporting currency stability.
On the other hand, the modest increase in the MPR indicates a measured approach to monetary tightening, with the aim to manage borrowing costs. Osun, Delta Fine Google, Meta $350m Each For Tax Evasion
