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Bond Yields Slide Over FMDQ Market Intervention

Bond yields plunged on Thursday, September 10, reflecting a rise in value.

The depreciation came as markets continued to react to the plan by JP Morgan to eject Nigerian government bonds from its Government Bond Index-Emerging Markets (GBI-EM) by end of October.

The fall in bond yields was attributed to the intervention by FMDQ OTC in the fixed income securities market.

FMDQ, which is the Nigerian bond market regulator comprising the main commercial banks and the Central Bank of Nigeria (CBN), expanded the bid-ask spreads on bond trading to N1.00 from 0.30 kobo to contain volatility, helping to moderate a debt market sell-off.

The Managing Director of FMDQ, Bola Onadele, who confirmed the widening of the bid-ask spreads, said: “Without it, the market would have frozen and there would have been no offer for quotes. We have done the best thing in terms of risk management.”

To this end, the yield on the April 2017 Federal Government of Nigeria (FGN) bond plunged to 16.16 per cent on Thursday, September 10, from 16.53 per cent on Wednesday, September 9.

Similarly, the yield on the June 2019 bond slid to 16.33 from 16.68 per cent the previous day, while the yield on the February 2020 bond dropped to 16.21 per cent from 16.41 per cent on Wednesday.

 

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Comments (3)

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