Nigeria’s 30-Year Bonds Steady, Treasury Yield Falls
At the secondary market for the Federal Government of Nigeria bonds, trading activities ended on a calm note on Monday as investors began to factor in the 2023 election into their investing decisions, though, the Treasury bills market ended on bullish note.
According to traders, investors have been taking position at the low end of the curve as seen last week, skip mid position to retain bullish momentum at the end of the curve on Monday. Analysts told MarketForces Africa that the trading pattern surface after the apex bank price spot rates lower at its primary market auction for rollover bills.
In the secondary market, the yield has been descending as investors go bullish on Treasury instruments and the bonds space has seen its share of the decline in average yield amidst liquidity stress in the financial system.
In the money market, weak liquidity in the financial system has become a pressure point, forcing short-term rates upward while cash-rich Nigerian banks continue to demand higher rates in the interbank space.
Carry forward from previous week, short-term benchmark rates such as Open Repo (OPR) and the Overnight Lending Rate (OVN), widened further to 15.75% (from 13.63%) and 16.25% (from 14.13%), respectively, according to Cowry Asset Management.
Data from FMDQ Exchange shows that the overnight lending rate expanded by 212 basis points to 16.3% which analysts attributed to the absence of significant inflows to the system. READ: Gold Down as US 30-Year TIPS Auction High Yield Rises
In the Treasury market, the average yield dipped by 16 basis points to 8.3%. Across the curve, the average yield was flat at the short and mid segments, but contracted at the long (-42bps) end due to participants’ demand for the 350-day to maturity (-249bps) bill.
Elsewhere, the average yield pared by 1bp to 10.1% in the open market operation (OMO) bills segment, according to Cordros Capital.
In the market, prices of Federal Government of Nigeria Bonds remained relatively flat for the bulk of maturities despite the average secondary market yield staying steady at 14.09%.
Notably, the yields on 10-year, 15-year, 20-year, and 30-year debt instruments were steady from the previous day at 13.95%, 14.43%, 16.00%, and 14.72%, respectively Cowry Asset stated in a market note.
Across the benchmark curve, the average yield contracted at the short (-1bp) end, following the interest on the APR-2023 (-2bps) bond. Conversely, analysts noted that the average yield was flat at the mid and long segments.
In the foreign debt capital market, the value of the FGN Eurobond declined for the majority of maturities tracked as bearish sentiment returned. Consequently, the average yield expanded by 2 bps to 11.69%, according to traders note. # Nigeria’s 30-Year Bonds Steady, Treasury Yield Falls