Yield Rises as Sell Pressures Hit Nigerian Bonds
Benchmark yield rose as investors in the bond market trimmed their holdings amidst expectations for the first quarter (Q1) of 2025 supply calendar from the Debt Management Office. The sell pressures that dominated three of the five trading sessions raised benchmark yield by 7 basis points to 19.7%.
The negative sentiment was widespread across all tenors, with the medium-term instruments attracting the most sell pressure—an average yield uptick of 15 bps, Afrinvest Limited said in a note.
Similarly, average yield on the short- and long-term bonds rose 12 basis points and a basis point week on weeK, respectively. The yield upward movement was influenced by the sell bias following the Nigerian Treasury bills auction conducted on Wednesday.
It was a predominantly bearish session, with offers focused on short-to-mid maturities, including March 2025, February 2031, and February 2034. Low transaction volumes characterised the market, partly due to wide bid/ask spreads, AIICO Capital Limited told investors in a note.
Analysts said notable interest was observed in May 2033 and April 2032 bonds, while offers at the long end, such as June 2053, persisted. As the week closed, the market remained subdued, with selective trading in April 2029, February 2031, May 2033, and June 2053 bonds. The average mid-yield increased by 9 bps, ending at 19.70%.
Yields marched higher across the curve, with sell pressure on selected maturities. May-33 and Jun-53 recorded the largest increase, both rising by 20bps, while Feb-31 advanced by 10bps.
“We expect cautious trading next week as market participants await direction from Q1-2025 bond calendar,” TrustBanc Financial Group Limited said in a note. Fixed income market analysts at Cordros Capital Limited expect the release of December’s consumer price index (CPI) data to influence the direction of market activities.
“We also maintain our medium-term expectation of elevated yields consequent on anticipated monetary policy administration globally and domestically and sustained imbalance in the demand and supply dynamics,” Cordros Capital Limited stated. #Yield Rises as Sell Pressures Hit Nigerian Bonds Ministry Seeks $2 billion Fibre Optics Funding
