Yield on Nigerian Bonds Increases by 4bps to 18.57%
The average yield on Nigerian government bonds climbed by four basis points (4 bps) to 18.57% at the beginning of the week as investors reduced their holdings. The economic growth, slowdown inflation, and high end benchmark interest rate have fuelled increased demand for the naira assets.
A slew of analysts believe that investors have started to take positions in the debt capital market due to inflation-protected returns on investments. In a chat, LSIntelligence Associates said high-net-worth individuals seeking to protect their wealth will start finding fixed-interest securities more appealing compared with risky equities bets.
True to the analysts positions, there have been stock market routs with investors exiting their positions. On Monday, trading activities followed a similar pattern at the FGN secondary bond market. However, sell pressures were observed on the short end (+10 bps) of the curve.
Some portfolio investors sold down interest in mid-duration MAR-25 FGN bonds, causing its yield to rise by +147 bps, reversing the previous rally. The local bonds market saw significant offers on the mid-to-long tenors, though bids were sparse, AIICO Capital Limited said in its investor note.
Fixed income market analysts noted that trading volumes stayed low due to wide bid/ask spreads, with most activity on the April 2029s, February 2031s, May 2033s, and June 2038 papers.
Today, market players showed buying preference for the near-dated maturities in anticipation of lower rates in the upcoming Nigerian Treasury bills auction, TrustBanc Financial Group said in its investor note. Overall, average yield inched higher by 4bps to settle at 18.57%.
