The average yield on Federal Government of Nigeria (FGN) bonds remained stable in the secondary market yesterday due to a sparse trading session.
The average yield in the secondary market remained subdued at 19.34% at the end of the day as investors reduced trading activity on the naira asset.
Fixed income analysts reported that post-primary market auction trading activity has been low as investors’ appetites alter due to the increase in negative interest yields.
According to MarketForces Africa, the jump in inflation has eroded investors’ portfolio profits, while estimates suggest that Nigeria’s consumer price index (CPI) would continue to rise in the fourth quarter of the year.
A slew of fixed interest securities analysts said trading activities on Nigerian bonds have been mixed month on month as liquidity level and spot rates pricing set direction for pension fund administrators and other investors.
On Wednesday, the local FGN bonds market experienced mixed sentiments but ultimately ended on a slightly bullish note, AIICO Capital Limited told investors in a note.
Analysts noted that most of the activity focused on the February 2031 and May 2033 bonds, as investors capitalized on the attractive yields offered by these securities.
FSDH said in a report that the hike in rates and yields in Q3 2024 increased investor interest in the fixed-income market, putting downward pressure on FGN Bond yields during the quarter.
As a result, the average FGN Bond yield peaked at 20.1% in mid-August, but due to demand pressures, it fell to 18.7% as of 27 September 2024.
