Yield Clears Lower After DMO Raised ₦225bn from Bond Auction
The average yield on the Federal Government of Nigeria bond cleared lower Thursday in the secondary market after the Debt Management Office (DMO) raised more than ₦225 billion from bond auction today.
The total sum raised from the Federal Government of Nigeria bonds conducted today cut across subscription for 10-year (₦37.15 billion), 20-year (₦32.19 billion), and 30-year (₦155.91 billion) tenors.
The auction marginal rates printed flattish for 10-year and 20-year bonds at 11.65 per cent, 12.95 per cent, but jumped 10 basis points to 13.30 per cent for the 30-year bonds.
In the money market, a better liquidity position in the financial system continues to keep short term interest rates on the downward trend. The Overnight lending rate (OVN) decreased by 0.39 per cent to close at 13.56 per cent as against the last close of 13.95 per cent, while the Open Buy Back (OBB) rate remained unchanged at 13.00 per cent.
In the treasury segment, the Nigerian Treasury Bills secondary market closed on a mildly positive note with average yield across the curve decreasing by 1 basis point to close at 5.14 per cent from 5.15 per cent on the previous day, according to the FSDH Capital market report.
Fixed income market analysts also hinted that average yield across the long-term maturities declined by 2 basis points.
However, the average yields across short-term and medium-term maturities remained unchanged at 3.70 per cent and 4.62 per cent, respectively. FSDH said NTB 8-Sep-22 (-22 bps) maturity bill witnessed buying interest, while yields on 19 bills remained unchanged.
In the open market operations segment, the average yield across the OMO bills curve closed flat at 5.48 per cent. Meanwhile, average yields across short-term, medium-term, and long-term maturities remained unchanged at 5.35 per cent, 5.54 per cent, and 6.04 per cent, respectively.
After a heavy oversubscription in the primary market auction conducted by the DMO, FGN bonds secondary market closed on a mildly positive note. Analysts’ notes show that the average bond yield across the curve cleared lower by 4 basis points to close at 8.43 per cent from 8.47 per cent on the previous day.
Also, FSDH Capital stated that average yields across short tenor and long tenor of the curve decreased by 5 basis points and 1 basis point, respectively.
However, the average yield across the medium tenor of the curve remained unchanged. The FGNSB 13-NOV-2022 bond was the best performer with a decrease in the yield of 21 bps, FSDH Capital said while the 27-MAR-2050 maturity bond was the worst performer with an increase in yield of 11 basis points.
FGN Bond Auction for November 2021 was oversubscribed by 78 per cent (₦267.15 billion) due to relatively tepid investor demand with bid-to-cover ratios settling at 1.02x (10-year), 0.93x (20-year), and 3.39x (30-year).
DMO raised bonds worth ₦225.25 billion across the 10-year (₦37.15 billion), 20-year (₦32.19 billion), and 30-year (₦155.91 billion) tenors at marginal rates of 11.65 per cent, 12.95 per cent, and 13.30 per cent (+10 bps), respectively.
FSDH Capital Limited has notified about the upcoming launch of the Lagos State Government series IV bonds of up to ₦125 billion under the State’s ₦500 billion bond issuance programme.
The proceeds will be used to fund priority projects and refinance bridge facilities, according to the offer note. Lagos State Government is assigned an A+ rating by Augusto and an A+ rating by GCR. The bonds will be listed on FMDQ Securities Exchange Limited and/or the Nigerian Exchange. # Yield Clears Lower After DMO Raised ₦225bn from Bond Auction