Selloffs Push FGN Bond Yields Higher, T-Bills Steady

Selloffs Push FGN Bond Yields Higher, T-Bills Steady

Sell pressures were witnessed in the secondary market for trading the federal government of Nigeria’s existing bond instrument while the naira trades steady in the foreign exchange market.

Partly, the market participant’s decision to dump some long-dated bills was driven by squeezing liquidity in the financial system, according to some fixed income analysts that spoke with MarketForces Africa. 

In the money market on Thursday, data from the FMDQ Exchange platform showed that the overnight lending rate expanded by 150 basis points to 14.7%.

Market analysts attributed the worsening liquidity condition to the recent outflow for bond auction settlement as local banks with strong net positions continue to demand higher rates.

MarketForces Africa reported that the Federal Government of Nigeria, through the Debt Management Office (DMO), conducted a bond auction earlier this week for a sum of N225 billion. The instruments include three re-opening issues split as Mar 2025 FGN bond, Apr 2032 FGN bond, and Apr 2037 FGN bond.

The subscription level was strong, though there was tepid participation when compared with the August session, according to market analysts. READ ALSO: Treasury Bills Yield Rises, FGN Bond Hits 10.75%


Meristem Securities said in a note that the sentiment in the market has been largely mixed since the previous auction, with the average bond yield at 12.74% as of the 15th of September – 7 basis points lower than the yield as of the last auction date.

Analysts projected that there will be a reversal in the sentiment hinged on the expectation of a rate hike at the primary market auction. Now, the market participants have started weighing investing options with the recent bearish move as inflation pressures bite.

In the secondary market for the Nigerian Treasury bills, trading activities were quiet, as the average yield was unchanged at 7.6%.  Similarly, the average yield closed flat at 9.4% in the OMO bills segment, according to Cordros Capital market report.

Activities in the bond segment ended with selloffs. Then, the average yield expanded by 7 basis points to 12.9%. Across the benchmark curve, Cordros Capital said the average yield expanded at the short (+18bps) end as market players sold off the FEB-2028 (+58bps) bond.

The average yield was flat at the mid and long segments. The naira was flat at N436.50 at the Investors and Exporters foreign exchange window on Thursday’s close, according to data from FMDQ Exchange. #Selloffs Push FGN Bond Yields Higher, T-Bills Steady#

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