Nigerian Bond Yield Declines by 5 Basis Points to 19.67%
The average yield on Nigerian government local bonds declined by 5 basis points (bps) in the secondary market to 19.67% as a result of buying interest in the mid segment. The local FGN bond market showed a positive trend.
There was significant activity around the 2033 and 2053 papers. Fixed interest securities investors ramped up these bonds in the market as primary market supply tempers. The Debt Management Office (DMO) slashed the offer size to N190 billion at the latest main auction, from standard maturities. The debt office’s offer to investors in its monthly auctions was N300 billion.
Trading in the FGN bond market showed slight positive movement, with the average secondary market yield decreasing by 0.05% to 19.67%. MarketForces Africa learned that the authority exceeded 70% of its 2024 target, or N4.3 trillion, at the conclusion of the July auction, which is why the offer or supply of DMO bonds has been reduced.
In its market update, Cordros Capital Limited told investors that across the benchmark curve, the average yield dipped at the mid (-6 bps) segment. The yield contraction was driven by demand for the JUN-2033 (-29 bps) bond, which closed flat at the short and long ends.
Meristem Securities Limited said in a note that the upcoming auction is poised for a rate decrease, driven by the DMO’s decision to delay and downsize the auction, effectively flooding the market to suppress rates and attract investors.
The investment banking firm said the strategic move is further supported by the recent inflation downtick to 33.40%; its nearly two-year low, which will contribute to the downward pressure on rates.
“With the domestic dollar bond offering coinciding with the FGN bond auction, there’s little reason to expect rates to remain elevated, setting the stage for a potential rate reduction”, Meristem said.
In the Nigerian sovereign Eurobonds market, bullish sentiment across segments of the yield curve led to a decrease in the average yield by 0.02% to 10.08%. #Nigerian Bond Yield Declines by 5 Basis Points to 19.67% Naira Suffers Big, CBN Goes Ballistic Against FX Whales
