Due to persistent investor indifference, trading activity on Federal Government of Nigeria (FGN) bonds were stable in the secondary market. Due to the growing negative interest rate on naira assets, dealers and bondholders in Nigeria’s bond market have been less optimistic.
In addition to the degree of liquidity in the financial system, the Pension Act and expectations for yield repricing have been important drivers and factors that keep market players focused.
Certain experts argue that the tight grip on interest rate pricing by debt management is a purposeful kind of financial repression aimed at lowering the expenses associated with servicing local borrowings for federal government debt. Interest rate rises reduced the actual return difference, but the debt office has continued to price bonds cautiously in comparison to the monetary authority.
Cordros Capital Limited told investors that across the benchmark curve, the average yield increased slightly at the short (+1bp) end,
The yield expansion was attributed to sell pressures on the MAR-2025 FGN bonds whose yield rose +2bps. On the other hand, yield closed flat at the mid and long segments.
Elsewhere, the value of FGN Eurobonds decreased for most maturities due to bearish sentiment. Consequently, the average secondary market yield increased to 10.21%. Traders said with mild activity noticed on few maturities, the average mid-yield steadied at 18.73%.
