Nigeria’s 10-Year Bond Yield Slides to 12.94%
The average yield on Nigeria’s 10-year bond declined to 12.94% midweek due to increasing demand for the paper by local investors in the fixed income market. With the inflation rate level at 22.04%, the real return on naira-denominated investment securities assets remains exposed.
The bond market is enjoying government regulations that demand that a large chunk of pension assets must be invested in the space.
Moving to balance their respective portfolios, fund/asset managers traded mixed at the FGN Bond market as market players submitted sizeable bids on short-dated maturities to submerge paltry offers at the belly of the curve.
Notably, Mar-27 FGN bond which lost 36 basis points recorded the sharpest drop in yield, while Mar-35 paper added +21 basis points to close at 14.96%, traders reported. Accordingly, the average yield cleared a basis point lower to 14.33%.
Elsewhere, the Eurobond market received sizeable bids from Foreign Portfolio Investors, despite indications of cooling from the just-released US Consumer Price Index data which came at 4.9%.
According to TrustBanc Capital, the bullish bias skewed mostly to the near corner of the benchmark curve, as Jul-23 securities dipped by 63 basis points. Accordingly, average yield slid by 9bps to close at 13.14%. The 10-year US Treasury yield inched 1bp higher to close at 3.53%.
FGN bond prices were largely flat for most maturities, despite the average yield on the secondary market contracting, according to Cowry Asset Management Limited.
The investment firm to clients in a mail that the 10-year debt was 104 basis points richer, yielding 12.94% (from 13.30%), while the yield on the 15-year note ticked up 21 basis points to 14.96%.
The 20-year and 30-year FGN Bonds yields held steady at 15.23% and 15.84%, respectively. Amidst fx crisis in Nigeria, the Naira weakened against the greenback, trading lower at N463.02 (from N462.25) at the Investors’ and Exporters’ windows.