Average Yields on Bonds Leap to 13.7%

The bond market witnessed some moderation in yields at the beginning of the week as investors took position in medium to long-term bonds instruments.

Following the decision of the MPC to retain Monetary Policy Rate (MPR) at 12.0 per cent, the bonds market gained traction on Wednesday as average yields declined from 13.6 per cent on Tuesday to 13.4 per cent.

However, on Thursday average yields further moderated to 13.3 per cent before closing at 13.7 per cent last Friday.

The sovereign bonds yield curve also shifted downwards W-o-W on account of a generally bullish market in which case average yields moderated to 13.7 per cent from 14.0 per cent in the previous week.

Afrinvest said: “Our price analysis across term structure of bond yield curve shows that ten bond instruments are still selling at attractive discounts to par value as against only seven instruments that are trading at premium to par.

“We believe the bonds market will likely trade bullish in the coming week as we expect most PFAs, HNIs and other institutional investors to pump in liquidity in order to take advantage of current low prices.

“We advise investors to continue to consider longer tenured bonds instruments with high modified duration in their portfolio as they tend to offer the highest return in a declining yield environment. To this end, we recommend the 20-year benchmark instruments (July-2030, July 2034 and March 2036) which are currently trading at discount to par values of N78.86, N90.93 and N94.05 respectively.”