Loss In Trading Volume Keeps Yield On FGN Bonds At 18.75%

FGN Bond For Jan. 2021 Oversubscribed

Due to light pocket trading activity, the benchmark yield on Federal Government of Nigeria (FGN) bonds was constant in the secondary market ahead of May’s inflation statistics. on assets denominated in Naira.

Notwithstanding shifting market conditions, trading activity on local bonds has been comparatively modest over time. The debt office’s tightening of the borrowing rate failed principally to prevent demand, primarily from pension fund administrators. Inflation is also fluctuating, as is the exchange rate.

The statistics agency projects that the rate of inflation will increase even further from 33.68% in April. Investors have been receiving negative interest yields in spite of this. With the expectation that yields will rise in the second half of the year, analysts are projecting that the real return will expand.

The debt office has raised a significant amount from its primary market auction sales at a relatively subdued interest rate on bonds versus Treasury bills. This caused an inverted yield in the fixed-income market as pension assets continued to mix their portfolio holdings.

Weighing the fast-changing market variable, activity in the Federal Government of Nigeria (FGN) bond market was subdued, with investors exiting positions in the MAR-25 and JAN-26 instruments.

Analysts said this move caused yields to decrease by 4 basis points and 2 basis points, respectively. Despite these movements, the average secondary market yield held steady at 18.75% compared to the previous close.

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