Yield on FGN Bond Falls after DMO Auction
The average yield on Federal Government of Nigeria (FGN) bonds track lower midweek after Debt Management Office (DMO) auction amidst cautious trading activities in the fixed income space.
Meanwhile, following healthy liquidity in the financial system, money market rates slipped further on Wednesday to a lower single digit, the money market recorded the average interbank rate dropped.
Data from the FMDQ Exchange shows that the overnight lending rate decreased by 64 basis points to close at 1.28 percent as against the last close of 1.92 percent. Also, the Open Repo rate dropped off 50 basis points to close at 1.00 percent compared to 1.50 percent on the previous day.
In the secondary market, trading activities on the Nigerian Treasury Bills (NT-Bills) closed on a flat note with the average yield across the curve remaining unchanged at 4.29 percent, according to traders’ notes.
The average yields across short-term, medium-term, and long-term maturities remained unchanged at 3.69 percent, 4.24 percent, and 4.93 percent, respectively, FSDH Capital said in its note.
In the OMO bills market, the average yield across the curve closed flat at 5.30 percent, traders reported. Average yields across short-term and long-term maturities remained unchanged at 5.41 percent and 5.24 percent, respectively.
Amidst the N150 billion FGN bond auction conducted by the DMO, trading activities in the FGN bonds secondary market closed on a mildly positive note on Wednesday.
The average bond yield across the curve cleared lower by 2 basis points to close at 11.42 percent from 11.44 percent on the previous day, according to traders note reviewed by MarketForces Africa.
FSDH note reads that the average yields across short tenor, medium tenor, and long tenor of the curve declined by 1 basis point, 1 basis point, and 4 basis points, respectively.
The 18-JUL-2034 maturity bond was the best performer with a decrease in the yield of 16 basis points, according to fixed income traders.
On Wednesday, the DMO conducted its scheduled FGN bond auction to reopen the 10-year and 20-year instruments. A total of ₦150 billion was offered across 10-year (₦75 billion) and 20-year (₦75 billion) tenors.
The settlement will take place on February 18. The interest will be paid quarterly, with a redemption bullet repayment on the date of maturity. #Yield on FGN Bond Falls after DMO Auction
