Nigerian Bonds Yields Steady on Soft Demand
The average yield on Nigerian government bonds was relatively steady in the secondary market as demand softened. According to fixed income market analysts, the investors traded cautiously ahead of the midweek auction of the Central Bank.
However, analysts observed some activity at the mid-segment (-5bps) of the curve, particularly on the Jan-35 (-26bps), Feb-31 (-8bps), and Jul-30 (-6bps) papers.
The average benchmark yield remained unchanged at 18.4% on Monday amidst expectation of steep yield repricing. In the secondary market, the 2031 FGN bond saw mild buying interest; however, this was offset by moderate sell-offs as profit-taking dominated the short and mid ends of the curve.
FGN bond with 2029 and 2034 maturities closed on offer at 18.98% and 18.20%, respectively, traders said in their respective market updates. Across the benchmark curve, the average yield decreased at the short (-1 bp) and mid (-2 bp) segments, while it closed flat at the long end.
Erad Partners Limited said in a macro update released that February 2024 witnessed a remarkable resurgence in the Nigerian fixed income market, characterized by a substantial compression of yields and a surge in investor confidence.
Notably, the market experienced a month-on-month yield decline of approximately 400 basis points, a significant shift driven by robust investor sentiment from both domestic and international participants, the firm said.
It was noted that the bullish trend was primarily fueled by a confluence of factors, with the most significant being the encouraging deceleration of inflation.
The headline inflation rate, which had previously reached a concerning peak of 34.8%, moderated significantly to 24.48% in February. This positive development instilled confidence in investors, suggesting a potential easing of monetary policy tightening in the medium term. #Nigerian Bonds Yields Steady on Soft Demand Naira Extends Rally on Declining Foreign Reserves
