Returns on Nigeria Bonds, T-Bills Steady as Naira Falls
Patience Oniha, DMO Boss

Returns on Nigeria Bonds, T-Bills Steady as Naira Falls

The average returns on Federal Government of Nigeria (FGN) borrowing instruments, Bonds and Treasury bills were steadies amidst falling local currency, data obtained from the market showed.

The Treasury bills secondary market traded on a quiet note, as the average yield was unchanged at 7.3%. In the same vein, the average yield remained at 11.0% in the OMO segment.

However, sentiments in the FGN bond secondary market were mixed but with a bullish undertone. Overall, the benchmark yield closed flat at 14.06%. Across the benchmark curve, analysts said the average yield contracted at the short (-8bps) end due to buying interest in the MAR-2025 (-39bps) bond.

The yield curve expanded at the mid (+7bps) segment following profit-taking activities on the APR-2032 (+13bps) bond. Elsewhere, the average yield closed flat at the long end. FGN’s 10-year borrowing cost yielded around 14.33% (from 14.25%), while the 20-year and 30-year papers held steady at 15.19% and 15.40%, respectively. 

Generally, activities were muted as most bond paper yields closed relatively flat. However, the market recorded a six basis points appreciation at the mid-end of the curve, offset by an eight basis points contraction at the short-end of the bond yield, according to CardinalStone Securities.

In the money market, funding rates continue to adjust downward as liquidity flood the financial system. Due to the absence of funding pressures, the Nigeria Interbank Offered Rate (NIBOR) fell across the board for most maturities tracked, Cowry Asset managers said in a report.

Thus, money market stress eased and banks with liquidity requested lower rates, asset managers told investors via email late night on Thursday. The overnight lending rate contracted by 40 basis points to 2.60% while the open repo rate moderated to 1.90% from 2.58%, FMDQ data showed.  

At the international debt capital market, FGN Eurobonds were bearish for all maturities, as the average secondary market yield closed higher at 11.34%.

In the forex market, the naira dropped again as demand spiked. Specifically, the local currency depreciated by 3.2% to N762.71 per US dollar at the Investors and Exporters window. In the parallel market, the exchange rate worsened to N925, according to channel checks.#Returns on Nigeria Bonds, T-Bills Steady as Naira Falls

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