Nigerian Bonds Rally, Benchmark Yield Falls by 31bps
The average yield on Nigerian government bonds fell by thirty one (31) basis points (bps) in the secondary market as investors increased bets on naira assets.
Trading activities were heated up over signs of lower bonds supply via primary market auction. Demand was concentrated at the mid to long end of the curve. Bonds buying was supported by ample system liquidity
The thin supply from the Debt Management Office (DMO) in the second quarter triggered successive rallies in the secondary market, and then drag yield downward across the curve.
This market narrative is not expected to change significantly when the Debt office release third quarter borrowing calendar, a number of broadstreet analysts told MarketForces Africa.
Ahead of third quarter bond offers, fixed income market analysts reported that demand remained strong on Thursday, pushing average yield lower below 18% mark.
Investment bankers reported buying activity was observed at the short (-8bps), mid (-13bps) and long (-56bps) segments of the curve, with the JUL-45 (-190bps) recording the most notable contraction in yield.
The market recorded strong demand for the Nigerian bonds maturing in Apr 2029, Feb 2031, May 2033, Feb 2034, and June 2053. Offers trended lower, particularly for the May 2033s at 17.70%, according to analysts at AIICO Capital Limited.
The bullish mood is expected to continue through the week, though investors may trade cautiously ahead of the Q3 bond calendar release. The average yield contracted by 31bps to 17.3%.
Across the benchmark curve, the average yield contracted at the short (-5bps), mid (-12bps) and long (-56bps) segments, driven by demand for the FEB-2028 (-20bps), APR-2037 (-18bps) and MAR-2050 (-190bps) bonds, respectively. #Nigerian Bonds Rally, Benchmark Yield Falls by 31bps
