Nigerian Bond Yield Slumps to 19.41% as Investors Increase Bets
The benchmark yield on Nigerian government bonds trading in the secondary market plunged by 9 basis points as investors increased fixed interest securities assets in their portfolios.
The bond market rallied because more and more investors were seeking investment options to park some cash.
The high liquidity level in the financial system aided the bullish trend amidst the damaging effects of the inflation rate. Another catalyst driving increasing positions in the fixed-income market is the negative local currency exchange rate.
Specifically, buying momentum was witnessed on mid to long-dated instruments amidst elevated yield on financial assets.
Trader’s notes showed that activities were mainly at the mid-segment of the curve. Market players showed significant interest in the 7 -10-year bonds. Cadbury Nigeria Loses N19.09bn in 2023
Buy interests in the FEB-31 FGN Bonds (-67bps), JUL-30 FGN bonds (-45bps), JUN-33 FGN bond (-33bps) and FEB-34 FGN bond (-53bps) instruments contracted the mid-segment of the curve by 28 basis points, according to Cardinalstone Limited.
However, bearish sentiments in the MAR-25 (+7bps) and JAN-26 (+4bps) instruments expanded the short end of the curve by two basis points.
The long end of the curve closed flat. Consequently, the average yield contracted 9 basis points to close at 19.41% in the secondary market.
In the money market, the liquidity level trended positive. As a result, short-term benchmark interest rates decline, according to data from the FMDQ Securities Exchange platform.
The interbank rates, that’s the open repo and overnight lending rates contracted by 382bps and 329bps, closing at 23.47% and 24.92%, respectively.
