Risk-Off Sentiment Triggers Surge in Nigeria’s Bond Yields
The Nigerian Federal Government (FGN) bonds market closed on a notably bearish note, with average yields climbing by 6 basis points in the secondary market on Wednesday.
Investors sold down holdings despite the financial system’s excess liquidity.
This shift signals a clear decline in investor confidence and a diminishing appetite among domestic investors for naira-denominated fixed-income instruments.
At the short end of the yield curve, bonds exhibited a mixed-to-positive trading pattern. The yield on the bond maturing on February 23, 2028, edged up by 1 basis point to 16.15%.
Conversely, yields on the bonds maturing on March 20, 2028, and April 17, 2029, each slipped by 1 basis point to 15.95% and 15.61%, respectively.
In the mid-tenor segment, a pronounced bearish sentiment took hold, particularly affecting the bonds maturing on February 21, 2031, and April 27, 2032, with yields surging by 46 basis points and 62 basis points to 16.23% and 16.22%, respectively.
Meanwhile, long-dated bonds displayed relative stability amidst the turmoil. Overall, the average benchmark yield rose by 6 basis points, closing at 15.51%.
This trend underscores the shifting landscape of the Nigerian bond market and highlights the need for investors to navigate these challenging conditions with caution and diligence.
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