Riskoff Sentiment on Nigerian Bonds Provokes 5bps Yield Surge
The average yield on Nigerian government bonds in the secondary market rose by 5 basis points, traders said in their separate notes, citing heated selloffs on naira assets.
Investors reacted to subdued yield in the bond market following monetary policy tightening the nudged benchmark interest rate higher by 25 basis points to 27.50%. The latest adjustment to the policy rate, however, reduced the negative real return in the fixed income market to 6.38% as inflation settled higher at 33.88% versus 27.50% interest rate benchmark.
On Wednesday, investors in the debt market reacted with selling activities on government bonds and Treasury bills. This caused yield to expand following an increase in the benchmark interest rate by the monetary authority.
Across the benchmark curve, the average yield expanded at the short (+1 bp) and mid (+8 bps) segments, Cordros Capital Limited told investors in a note. Analysts saw sell pressures on the JAN-2026 (+2bps) and JUN-2033 (+52bps) bonds, respectively, but closed flat at the long end.
Fixed income market analysts said they observed some bearish activity at the mid-segment (19 bps) of the curve. Local bond market investors took profit on the FEB-34 FGN bond, causing its yield to increase by +83 bps.
Also, there were selloffs on JUN-33 FGN bonds in the secondary market, causing its yield to rise by +52 bps. A similar trading pattern was observed on the MAY-33 FGN bond, whose yield rose by +11 bps on the day in the secondary market.
Due to the sell pattern in the market, the average yield on Nigerian government bonds rose by 5 basis points to 19.45%. #Riskoff Sentiment on Nigerian Bonds Provokes 5bps Yield Surge Naira Sinks as US Dollar Volume in FX Market Dips by 40%
