Nigeria’s 10-year bond’s average yield decreased to 12.94% by midweek as a result of rising local investors’ interest for the paper on the fixed income market. The real return on assets with naira-denominated investment securities is still at risk with the inflation rate at 22.04%. Government restrictions that require a sizable portion of pension assets to be invested in the sector are beneficial to the bond market.
As market participants made significant bids on short-dated maturities to submerge meager offers at the belly of the curve, fund/asset managers traded in a diverse manner in the FGN Bond market as they moved to balance their different portfolios.
Notably, the Mar-27 FGN bond’s yield dropped by the most, by 36 basis points, while the Mar-35 paper gained 21 basis points to settle at 14.96%, according to traders. As a result, the average yield decreased by one basis point to 14.33%.
Foreign Portfolio Investors made large bids on the Eurobond market elsewhere, despite signs of cooling from the recently reported US Consumer Price Index data, which came in at 4.9%.
In light of the 63 basis point decline in Jul-23 securities, TrustBanc Capital reports that the near corner of the benchmark curve has the strongest bullish bias. Accordingly, average yield decreased by 9bps to close at 13.14%. The yield on the US 10-year Treasury rose by 1 basis point to close at 3.53%.
FGN bond prices were largely flat for most maturities, despite the average yield on the secondary market contracting, according to Cowry Asset Management Limited.
The investment firm to clients in a mail that the 10-year debt was 104 basis points richer, yielding 12.94% (from 13.30%), while the yield on the 15-year note ticked up 21 basis points to 14.96%.
The 20-year and 30-year FGN Bonds yields held steady at 15.23% and 15.84%, respectively. Amidst fx crisis in Nigeria, the Naira weakened against the greenback, trading lower at N463.02 (from N462.25) at the Investors’ and Exporters’ windows.
