Nigerian bond yields jumped across the curve on Wednesday, March 23, after the central bank unexpectedly tightened monetary policy in an effort to attract foreign investors.
The Central Bank of Nigeria, CBN, yesterday spiked its benchmark rate to 12 per cent from 11 percent, having cut rates only four months ago by 2 percentage points, and lifted the cash reserve ratio for commercial banks to 22.5 per cent from 20 per cent.
Yields on the benchmark 20-year bond climbed 55 basis points (bps) to 12.7 per cent while the 10-year yield climbed 45 bps to 12.65 per cent. The yield on five-year paper, the most liquid maturity, gained 41 bps to 11.7 per cent.
CBN governor Godwin Emefiele, said extra liquidity had not translated into more lending and cited inflation, at a 3-1/2-year high of 11.4 percent last month, and well above the central bank target of 6 per cent to 9 per cent.
