The average yield on Federal Government of Nigeria (FGN) bonds rose as fixed income market players rebalanced their portfolios ahead of inflation data. The selloff in government bonds increased the benchmark yield by two basis points, according to dealers, as the National Bureau of Statistics prepares to announce inflation statistics for April 2024.
Inflation increased to 33.20% in March, a 30-year high, due to macroeconomic dislocations, some of which were driven by reform, particularly the Nigerian government’s decision to reduce expensive petroleum subsidies.
Fixed interest securities dealers reported sale pressures near the midpoint of the curve (+10bps). Bondholders sold APR 32 FGN paper, forcing the yield to jump by 37 basis points.
There was selloffs on JUN 33 FGN, which resulted in 24bps increase its associated yield line. FEB 34 FGN Bond yield rose +17bps due to sell pressures. Conversely, the average yield declined at the long (-2bps) end driven by interests in the MAR-2050 (-15bps) bond.
Subsequently, average yields increased by 2bps to settle at 18.64%. In the money market, there was liquidity pressures. The financial market was confronted with funding pressures, which lifted the benchmark short term interest rate elevated.
For inter-bank rates, open repo and overnight lender rates increased by 83bps and 98bps to close at 29.69% and 30.59%, respectively, accor4ding to data from FMDQ Securities Exchange platform.
