Fixed Income Investors Sell FGN Bond On Policy Inaction

Due to selloffs in the secondary market, the average yield on the Federal Government of Nigeria (FGN) bond increased by 8 basis points (bps). Due to the anticipated monetary policy inactivity on rates, this caused bond asset prices to plummet as yield increased.

In October 2023, investors began modifying their portfolio plans to better fit with market developments as inflation spiked to 27.33%. The likelihood of a monetary policy rate change later this month also fueled market response. The meeting scheduled for November has been postponed by the Monetary Policy Committee.

Because of the unfavorable reactions in the market, trading activity turned gloomy. To settle at 15.81%, the average yield rose by 8 basis points (bps). The main cause of this unfavorable attitude was the 72 bps and 41 bps yield expansions.

In the money market, the Nigerian Interbank Offered Rate trended higher across most of the tracked by Cowry Asset Limited, the investment firm said in a note. Key money market rates, including the open repo rate (OPR) and the overnight lending rate (OVN), increased by 2.27% and 1.68% to 23.10% and 23.88%, respectively.

On the other hand, the Nigerian Interbank Treasury Bills True Yield (NITTY) closed lower across all of the tracked tenors, according to traders. Consequently, the average secondary market yield on the Nigerian Treasury Bills was down by 52 bps across the short, mid and long end of the curve to close at 12.74% on the back of buy interest.

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