The average benchmark yield on Nigerian government bonds climbed on Thursday as a result of price declines. This comes as market investors seek higher rates on government new issuing as inflation continues to climb.
Nigeria’s headline inflation rate surged to 22.79% in June, fueled by food inflation. According to researchers, the statistic does not account for the increase in gasoline prices caused by the loss of subsidies. As a result, Broadstreet analysts believe the consumer price index will deteriorate in the second half of the year.
Fixed income dealers in the secondary market were negative yesterday, as the average yield jumped by 18 basis points to 13.1%. This occurred despite the banking system’s increased liquidity.
According to Cordros Capital, the average yield increased at the short (+59bps) and long (+4bps) ends of the benchmark curve as market participants sold off the MAR-2024 (+294bps) and JUN-2053 (+44bps) bonds, respectively.
In contrast, the average yield in the mid-segment closed flat. Cowry Asset Management stated in its market analysis that the 10-year, 20-year, and 30-year FGN bonds were unchanged at 12.99%, 14.60%, and 14.63%, respectively.
FGN Eurobonds rose across all tracked maturities, suggesting continued optimistic sentiment, while the average secondary market yield fell 25 basis points to 10.10%.
At the monthly bond auction, the DMO had planned to N360 billion worth of bonds. However, robust system liquidity ensured that demand was robust at 2.6x the offer. This enabled the Debt Office to eventually sell N657 billion worth of local bonds at lower average rates of 13.63% from 14.94% in June.
