The Nigerian local bond market traded on mixed feelings amid fears over continued inflation rate increases. Yesterday, financial experts and fixed-income dealers observed demand at the top of the curve and supply at the bottom.
The market saw purchasing activity, notably in the 26 APR 2029 debt, causing the average secondary market yield to fall from 12.70% to 12.66%. Cowry Asset Management reported in its market update that the 30-year borrowing cost climbed, yielding roughly 14.82%, up 19 basis points from the previous record of 14.63%.
Similarly, the investment business said that the 10-year note yielded roughly 12.90%, which was 9 basis points lower than the previously reported 12.99%. Traders said that the 20-year bond rate stayed unchanged at 14.60%.
FGN Eurobonds rose across all tracked maturities, suggesting continued optimistic sentiment, while the average secondary market yield fell by 15 basis points to 10.00%.
Cordros Capital Limited said in its market update to investors that the average yield fell throughout the benchmark curve at the short (-1bp), mid (-6bps), and long (-1bp) segments. The drop was related to investor demand for bonds maturing in MAR-2025 (-2bps), APR-2029 (-15bps), and MAR-2050 (-7bps).
Futureview informed investors that the Development Bank of Nigeria (DBN) intends to fund N23 billion in micro, small, and medium-sized companies (MSMEs) using 5-year loan capital obtained at 14.40%.
According to the investment business, the development bank strategy intends to reduce funding limitations, which prompted DBN to dip into the domestic market.
DLM Advisory and Standard Chartered Bank Lead Issuing Partners, Joined by Access Bank, Zenith Bank, FCMB, and Others. DBN’s capital raise is part of its N100 billion medium-term notes (MTN) programme, which focuses on funding MSMEs.
“The primary objective of DBN is to alleviate the financing challenges faced by MSMEs in Nigeria by providing financial support, partial credit guarantees, and technical assistance to eligible financial intermediaries in a market-conforming and sustainable manner”, Futureview explained.
Analysts said previously, DBN sourced capital from international development partners, but now it has decided to explore the domestic market, even amid the high-interest rate environment. DLM Advisory will take the lead as the Issuing House, with support from Standard Chartered Bank, Access Bank, Zenith Bank, FCMB, and other bank lenders.
“The raised funds will be disbursed to MSMEs as loans to help them expand their operations and must be repaid in accordance with approved term sheets. Unlike typical funding for MSMEs, where investors might receive funding in exchange for equity without repayment obligations, this issuance involves loans that require repayment.
The current fragile economy may mildly affect the performance of MSMEs during this period, potentially impacting the repayment frequency. Despite the challenging economic climate, analysts anticipate significant subscriptions to the issuance, leveraging the substantial domestic liquidity.
Additionally, Global Credit Rating Agency, a subsidiary of Moody’s, has given the bond issuance a AAA (NG) rating, reflecting its strong credit quality and reliability”, Futureview said in its market update.
