Yield Jumps as Investors Trim Interest in Nigeria Bonds
Market Prices of Nigerian government bonds declined as fixed interest securities investors reduced their holdings of naira assets in the secondary market ahead of Debt Management Office (DMO) monthly auction.
The risk off sentiment that drove reduced holdings of local borrowing instruments pushed the benchmark yield higher to 18.61% ahead of inflation data from April. At the last reading, consumer price index rose to 33.20%, topping the 30 year high following multiple macroeconomic pressures.
Despite negative interest yield, pension assets managers, local deposit money banks and other institutional investors have continued to take back to back position on Naira asset due to elevated yield on debt papers.
In the secondary market, the FGN bond market was predominantly quiet. Traders however saw upticks in yield on papers at the mid-segment of the curve.
FEB-2031 FGN bond yield rose 46 bps after sell pressures, the same experienced was seen on JUL-2030 FBN Bond whose yield rose by 32bps while NOV-2019 bonds surged by 1bps.
Meanwhile, the average yield pared at the long (-1bp) end due to mild interest in the JUN-2053 (-13bps) bond. However, the average yield expanded by 3-basis points to close at 18.61%. Nigeria is expected to conducts primary market auction next week, based on Debt Management Office schedule.
In the money market, pressures on liquidity in the financial system eased, dragging funding rates to decline. The overnight lending rate contracted by 75bps to 29.0%, despite the debits for the net treasury bills issuance worth N95.31 billion. Customs Hands Over Fake U.S. Dollars, 148 Drones to EFCC, Army
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