Nigerian Bonds Yield Drops to 15.87%
The Nigerian bond was dominated by strong buy momentum in the secondary market despite pressures on the economy. Market interest was visible on short duration with flat trading activities across the belly and long end of the curve.
In the secondary market, investors switched mood on naira assets seen in the past week was halted as gains on local bonds dragged yield lower, widening real return against headline inflation.
Due to liquidity level consideration that aids the government’s ability to reprice local bonds, the real return on investment slackened amidst an expectation that consumer inflation in Nigeria would close the year at about 30% – plus or minus.
Traders said in their separate reports that there was buying interest on MAR-24 FGN Bond on Monday, causing the average yield to decline by 4bps, to close at 15.87%.
In Nigeria’s sovereign Eurobonds market, sell sentiment was evident across the short, mid, and long ends of the yield curve, resulting in a 2bps increase in the average yield to 10.86%.
On Friday, the bearish sentiment in the domestic bonds market extended as the average yield across tenors rose 10bps week on week to 15.7%. Naira Devaluation Deepens Economic Crisis in Nigeria
The medium and long-term instruments witnessed the most selloffs as the average yield increased 39bps and 24bps respectively, while the average yield on the short-term instruments declined 39bps, according to analysts’ notes.
Afrinvest Limited predicted that market participants are expected to maintain a hawkish interest rate outlook, repricing yields higher.
Across the benchmark curve, the average yield contracted at the short (-18bps) end as players demanded the MAR-2024 (-93bps) bond. On the other hand, the average yield was flat at the mid and long segments, Cordros Capital told investors in an email.