Amidst economic uncertainty, investors cut their holdings of Nigerian bonds, which resulted in an increase in the average yield. According to traders, investors and pension asset managers made adjustments to their portfolios, causing the average yield to increase by 5 basis points to 18.98%.
Cordros Capital Limited informed investors in a note that the average yield throughout the benchmark curve increased at the short (+17bps) end due to sell-offs on the JAN-2026 (+86bps) bond, but finished flat at the mid and long segments.
The debt management office’s most recent auction revealed that investors are beginning to look for rates that reflect the concerns in the financial world.
The debt office has raised more than N4 trillion in the local debt capital market out of the amount planned for 2024. Following the authority bond front loading in the secondary quarter, analysts expect issuance to reduce in the second half of the year.
FGN bonds market closed bullish in Q2’24, falling by 10bps to 18.84% at the end of Q2’24 from 18.84% at the end of Q1’24. Traders said the slight bullish close for the quarter can be alluded to the downtrend in stop rates at the auction, particularly the first two auctions in Q2’24.
Analysts said the July auction makes predictions challenging to decipher. Investors showed apathy toward the primary market auction, which resulted to lower subscription level.
“We know that the DMO has raised a significant amount from the bond auction in H1 24, worth about ₦4.13 trillion, and at a very high cost”, AICCO Capital Limited said.
