The average yield on Federal Government of Nigeria (FGN) bonds declined by five basis points to 18.73% in the secondary market as investors ramped up naira assets. Demand for risk-free investment options has been booming due to elevated yields in the fixed-interest securities market.
With high inflation rate condition, both private and corporate investors are pushing for price cover to reduce pressure on declining naira assets.
According to investment experts, elevated yield on fixed income instruments have raised local deposit money banks appetite versus lending to the real sector of the economy.
Analysts said Nigeria’s high borrowing rates have triggered credit migration in the banking sector, and it has pushed impairment charges on credit losses upward for most lenders.
In the market on Wednesday, transaction on the local FGN bonds was calm, with minimal activity observed on the 2033 and 2053 bonds maturities.
Across the benchmark curve, Cordros Capital Limited told investors that the average yield expanded slightly at the short (+1bp) and long (+1bp) ends.
The yield expansion was spurred by selloffs of the MAR-2025 (+2bps) and JUN-2053 (+10bps) bonds, respectively.
Meanwhile, the average yield contracted at the belly of the curve by 38 bps following buying interests in the APR-2032 FGN bonds, whose yield dipped by 156 bps.
Overall, the thin trading activities, however, had a bullish tilt, which dragged the benchmark yield on government bonds downward by 5 basis points to settle at 18.73%.
