Nigerian Bonds Benchmark Yield Dips Slightly to 19.30%
The benchmark yield on Federal Government of Nigeria (FGN) bonds dipped slightly due to buying interest across long ends amidst a slowdown in supply. The hike in rates and yields in Q3 2024 increased investor interest in the fixed-income market, putting downward pressure on FGN Bond yields during the quarter.
The average FGN bond yield peaked at 20.1% in mid-August, but due to demand pressures, it fell to 18.7% as of 27 September 2024. In the secondary market for the FGN Bond market, traders said there was positive trading activity, which led to a marginal decrease in the average yield to 19.30%.
Investors expressed interest in the Feb 2031, May 2033, Apr 2037, and Jun 2053 securities. However, trading volumes were few and far between. Thus, the average mid-yield fell by 2 bps.
FSDH said in a noted that in Q4-2024, several factors could influence the fixed-income market yields, including the anticipated N1.40 trillion in Treasury Bills and OMO maturities, which could be reinvested into the market and help stabilise yields.
Analysts said the government’s high borrowing continues to exert upward pressure on yields. As of August 2024, credit to the government surged by 63.9% month-on-month, while credit to the private sector declined by 1.0%, further intensifying the pressure on government bond spot rates in the primary market.
Investor sentiment is likely to remain mixed, with some expecting higher yields in the near term and others opting to lock in the already elevated rates. Nonetheless, yields are expected to stay high and will closely follow movements in the policy rate. #Nigerian Bonds Benchmark Yield Dips Slightly to 19.30% Naira Rises against US Dollar Ahead of Sept. FX Auction
