Selloffs Provoke Yield Surge in Nigerian Bond Market
The average yield on the Federal Government of Nigerian (FGN) bond increased in the secondary market due to the latest selloffs. The investors reduce interest in naira assets on long dated instruments amidst expectation that an increase in fuel pump price would halt disinflation.
In July, inflation rate decline for the first time in about 30 months simply due to base effects. Consumer price index has remained relatively stubborn at 33.40% despite increase in policy rate.
Real return on bond investors improved after the inflation slowdown with the Debt Management Office cutting back on bond supply. Yesterday, the FGN bond market was relatively bearish, with activities mainly at the mid-segment of the curve.
Traders said selloffs in the JUN 2033 FGN bond , thus lifted its yield higher by 30 bps, while FEB 2034 FGN bond rose by 47 bps as a result of buying interest. The mid-segment of the curve is expanding by 10 bps.
In a note, Cordros Capital Limited said across the benchmark curve, the average yield increased at the short (+2bps) and mid (+6bps) segments. The yield inched higher as players sold off the MAR-2025 (+4bps) and JUN-2033 (+30bps) bonds, respectively, while it remained unchanged at the long end.
Consequently, the average yield increased by 3 bps to close at 19.41%. In Nigeria’s sovereign Elsewhere, Eurobonds market, sell pressure at the short, mid, and long ends of the yield curve led to a 0.07% increase in the average yield to 9.98%. #Selloffs Provoke Yield Surge in Nigerian Bond Market Nigeria, Angola Inflation Highest in Frontier Markets -Report
