US Fed Rate Nigeria U.S Dollar Bonds Face Sell Pressure

US Fed Rate: Nigeria U.S Dollar Bonds Face Sell Pressure

Nigeria Eurbonds face sell pressures in the secondary market amidst uncertainties, a stronger United States (US) dollar and a market expectation that Federal Reserves would likely maintain the status quo at the FOMC meeting midweek.

A growing number of foreign portfolio investors (FPIs) in the international capital market offloaded Nigeria’s US-denominated bonds amidst rising inflation and rising uncertainties in the local economy.

As a result, Nigeria’s Eurobond bonds were priced down in the market, pushing the benchmark yield higher to 11.24% in the secondary market. Traders reported that sentiments in the bond secondary market were mixed but with a bearish undertone, as the average yield inched higher by 1bp to 14.4%.

Across the benchmark curve, analysts at Cordros Capital said the average yield closed flat at the short and mid segments but expanded slightly at the long (+1bp) end as investors sold off the June 2053 (+5bps) bond.

Asset managers at Cowry Asset reported that yields on the 15-year, 20-year, and 30-year were flat at 13.61%, 14.92%, and 15.83%, respectively except for the 20-year instrument which closed bullish as the yield improved 20bps to 15.45%.

In the money market, NIBOR rates closed mixed on Tuesday as the market finds direction in the bid to reflect the liquidity conditions.

Notably, the overnight NIBOR trended higher by 1.67% points to 16.17% to reflect a system liquidity crunch while the key money markets rates such as the open repo rate (OPR) and the overnight lending rate (OVN) tanked to 14.63% and 15.40% respectively. 

Trading activities on Nigerian Treasury bills closed with mixed sentiments, albeit with a bearish tilt, as the average yield expanded slightly by 1bp to 7.9%.

Across the curve, the average yield closed flat at the short and mid segments but advanced at the long (+1bp) end due to selling pressures on the 324-day to maturity  (+9bps) bill. Elsewhere, the average yield was flat at 13.4% in the OMO segment #US Fed Rate: Nigeria U.S Dollar Bonds Face Sell Pressure Naira Devaluation Deepens Economic Crisis in Nigeria