Nigeria's 30-Year Bond Price Slumps over Selloff

Nigeria’s 30-Year Bond Price Slumps over Selloff

Due to selling pressures, the yield on Nigeria’s 30-year bonds rose to 15.26% with buckets of debt papers traded quietly after a relatively stronger demand for instruments achieved at the primary market auction conducted by the Debt Management Office on Monday.

Nigeria’s debt office is expected to ramp up N1.2 trillion from the local debt capital market to support the government spending plan. Key macroeconomic figures indicate growth could be threatened while naira scarcity triggers social unrest.

Despite the rally in the fixed income market, analysts projected a fresh yield uptick will resurface over an expectation that Nigeria’s local bond market will face sell pressures when asset managers begin to effects portfolio rebalancing strategy as inflation weighs on market returns. 

With a double-digit inflation rate ahead of 2023 election and the recent new naira notes crisis that forced local banks to shut down partially; economic growth is under threat, analysts told MarketForces Africa, saying investors would require a better rate as government begin to implement borrowing plans. 

National Bureau of Statistics is expected to release Nigeria’s inflation figures for January today after a 13-basis points pullback reported for December 2022 which saw the consumer price index printed at 21.34%.

In the secondary market, the prices of FGN bonds declined as bondholders sold off part of their long-dated debt instruments holdings, driven by partial portfolio rebalancing by asset managers.

Traders told investors in their market briefs that the average secondary market yield increased by 5 basis points to 13.11%.  The 30-year debt was 1 bps cheaper, with yields rising to 15.26%, noted Cowry Asset Management in a note to its clients.

Analysts hint that yield on 10-year FGN Bonds printed at 13.10%. The market sees longer-dated debt notes, 15-year FGN Bonds settled at 14.79% and 20-year FGN Bonds yields at 15.80%

Elsewhere, prices of FGN Eurobond increased for all of the maturities amid sustained bullish sentiment, thus the average secondary market yield contracted marginally to 12.20%.

Across the benchmark curve, Cordros Capital analysts said in a note that the average yield expanded at the short (+17bps) end as investors sold off the MAR-2025 (+52bps) bond. It was also noted that the average yield closed flat at the mid and long segments. # Nigeria’s 30-Year Bond Price Slumps over Selloffs

Naira Depreciates to N462 at Investors, Exporters FX Window

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