As the market assesses the effects of growing headline inflation on naira assets, the rates on Federal Government Bonds and Nigerian Treasury Bills (NTB) instruments were close to stable levels. It is mentioned that the actual return on investment has decreased due to the deteriorating inflation rate.
According to what appears to be a consensus, MarketForces Africa said that many investment banking, securities, and asset management companies believe the actual rate on investment assets has declined at the same time the market is experiencing pressure on the exchange rate.
According to statistics from FMDQ Exchange verified by MarketForces Africa, the native currency of Nigeria depreciated even further in the Investors and Exporters’ foreign exchange (FX) window.
The naira lost 0.2% of its value, falling to N446.67, as demand for American goods increased. In the money market, short-term rates have begun to trend higher due to the financial system’s lack of liquidity.
In the absence of any sizable inflows into the system, the Open Buyback Rate (OPR) and the Overnight Lending Rate (OVN) increased by 84 basis points and 67 basis points, respectively, to 16.17% and 16.50%.
Activity level in the secondary market for trading Nigerian Treasury notes concluded on a low note, with scattered transactions being noted.
Consequently, dealers said that the average yield remained at 10.6%. Similar to this, the segment’s average yield for OMO bills was unchanged at 10.2%. For medium- and long-dated bonds, the price of FGN securities was largely positive.
The average secondary market yield moved slightly higher by two basis points to 14.49%, according to analysts. The instrument from the 27-MAR-2050 was acknowledged as having the finest performance. Cordros Capital observed that the average yield rose in the short (+3bps) and mid (+6bps) segments throughout the benchmark curve.
Taking profits on the bonds due in FEB-2028 (+8bps) and APR-2029 (+8bps) was a factor in the increase. As a result of investor demand for the MAR-2050 (-9bps) bond, however, the average yield touched at the long end (-2bps).
For all maturities monitored by Cowry Asset Management on the foreign debt capital market, the value of the FGN Eurobond closed in favor of rising sentiment. As it finished at 11.51%, traders claimed that the average yield was subdued. Bond and Treasury prices decline when inflation sparks fear.
