According to trading data for the previous week, the local bond market ended on a gloomy note due to inflation and rising currency rate pressures that continue to expand the actual return on naira assets.
The direction of yields has been inconsistent, but fixed income market activity has remained steady and robust due to a lack of alternatives and the necessity that pension fund managers invest a sizable portion of pension assets in government securities.
With the announcement of the second quarter of the fiscal year 2023 bond issuance schedule by Nigeria’s debt management, investors liquidated their holdings across the curve in the secondary market for FGN bonds.
Information revealed that the 2042 and 2050 bonds would be substituted with the FGN bonds 2037 and 2049 by the Debt Management Organization (DMO). The average yield increased by 37 basis points to 13.6% as a result.
According to analysts, the negative momentum exhibited in the longer side of the yield curve was caused by a rise in rates for Treasury notes in the primary market.
Once the bonds MAR-2024 (-321bps), APR-2032 (-48bps), and JAN-2042 (-42bps) were sold, the average yield increased throughout the benchmark curve in the short (+83bps), mid (+21bps), and long (+27bps) segments.
In particular, Cowry Asset Management informed investors via email that the 10-year 16.29% FGN MAR 2027, 15-year 12.50% FGN MAR 2035, 20-year 16.25% FGN APR 2037, and 30-year 12.98% FGN MAR 2050 bonds all decreased by N0.77, N0.32, N0.91, and N2.59, respectively.
The comparable rates for these bonds increased to 12.73% from 12.50%, 14.75% from 14.69%, 15.10% from 14.95%, and 15.47% from 1.00%.
Due to persistent optimistic mood, the value of FGN Eurobonds traded on the global capital market increased further for all maturities monitored.
The 10-year 6.38% JUL 12 2023, 20-year 7.69% FEB 23 2038, and 30-year 7.62% NOV 28 2047 specifically gained $0.99, $3.48, and $2.79 respectively.
Meanwhile, their corresponding yields increased to 10.73% (from 14.11%), 12.76% (from 13.51%), and 12.43% (from 13.00%), respectively.
