The FGN bonds market began the week rather calmly, with the average yield rising by a basis point to 19.31%, according to traders’ notes. The selloffs occurred in the secondary market as focus shifted to the prime auction.
Weak liquidity in the financial market has continued to influence trade directions, but investors have also begun to consider the effects of disinflation on portfolios. On Monday, the Debt Management Office (DMO) came in the market to do its monthly auction. Traders said the main market auction diverted investors’ focus amid a limited bond supply.
Ahead of the auction, fixed income market investors had raised bets on federal government borrowing instruments on Friday. Analysts predicted the auction would be well received as supply of bonds has reduced to N200 billion from N360 billion.
This reflected on the trading pattern in the secondary market at the beginning of the week, Riskoff sentiment caused some selloffs witnessed across the tenors.
Analysts reported that across the curve, yields increased slightly at the short end (+2bps) due to selloffs on the MAR-25 FGN Bonds paper which gained 17 basis points.
However, the yield was unchanged at the mid and long segments due to thin transactions.
Overall, the FGN bonds market operated calmly because participants focused on today’s primary market auction. The average mid-yield ultimately settled at 19.26%.
“We expect investors to have mixed to bearish sentiments tomorrow after today’s FGN bond auction results”, AIICO Capital Limited said.
