Yields Ease as Fixed Income Market Turns Bullish

Yields Ease as Fixed Income Market Turns Bullish

Rising yields momentum eased as market participants in the fixed income market turn bullish on government securities. In the secondary bond market, the values of FGN bonds rose for most maturities as the average secondary market yield compressed 4 basis points to 14.56%.

The low swing was driven by demand pressure along the belly of the yield curve, according to market analysts.

Across the benchmark curve, analysts at Cordros Capital stated that the average yield declined at the short (-5bps) and mid (-13bps) segments as investors demanded the FEB-2028 (-31bps) and APR-2029 (-18bps) bonds, respectively.

Conversely, the average yield expanded at the long (+7bps) end due to profit-taking activities on the MAR-2036 (+37bps) bond. In its market note, analysts at Cowry Asset Management also stated that the value of the FGN Eurobond increased further for most maturities tracked on sustained bullish sentiment. 

Hence, the average yield on bond instruments contracted by 0.04 percentage points to 13.05%.

Short-term rates in the money market continue to slide amidst healthy liquidity in the financial system following a number of maturing instruments. Today, the Central Bank of Nigeria is expected to roll over maturing bills worth N193 billion via primary market auction.

Analysts are projecting higher spot rates amidst the ongoing yield repricing that follows increased benchmark interest rate hikes, up 400 basis points to 15.50%.

Data from the FMDQ Exchange platform indicates that the overnight lending rate contracted by 8 basis points to 8.8% over robust liquidity in the money market.

In the Treasury bills space, trading activities in the secondary market were bullish, as the average yield contracted by 19 basis points to 10.9%. READ: Treasury Yield Falls as CBN Committee Discusses Policy Rates

Across the curve, Cordros Capital told clients in an email that the average yield was flat at the short and mid segments but contracted at the long (-47bps) end.

This occurred following demand for the 310-day to maturity (-279bps) bill. Elsewhere, the average yield was flat at 10.2% in the OMO bills segment, according to traders’ report. # Yields Ease as Fixed Income Market Turns Bullish

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