FGN Bond Yields Rise for Most Maturities amid Susatined Bearish Activity…

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In the just concluded week, DMO auctioned
N150 billion worth of bonds; viz: N50 billion a piece for the 16.29% FGN MAR 2027 note, 12.50% FGN MAR 2035 paper and 9.80% FGN MAR 2045 bond but sold a total of N80.55 billion across the three maturities on offer.

Stop rates advanced to 10.25%( from 7.98%), 11.25% (from 8.74%) and 11.80% (from 8.95%) respectively.

Hence, amid sell pressure, the values of FGN bonds traded at the secondary market decreased and yields rose for all maturities tracked.

Specifically, traders sold at the longer end of the curve as they tried to mitigate the interest rate risk given the upward repricing of rates in the primary market.

We saw the 20-year, 16.25% FGN MAR 2037 lost N5.76 while its yield rose to 10.55% (from 10.01%).

Also, the 5-year, 14.50% FGN JUL 2021; 7-year, 13.53% FGN APR 2025 and 10-year and 16.29% FGN MAR 2027 lost N0.20%, N1.68 and N0.38 respectively; their corresponding yields rose to 1.60% (from 1.58%), 8.55% (from 8.12%) and 9.96% (from 9.90%) respectively.

Meanwhile, the value of FGN Eurobonds traded at the international capital market moderated for all maturities tracked.

The 10-year, 6.375% JUL 12, 2023 paper, the 20-year, 7.69% FEB 23, 2038 paper and the 30-year, 7.62% NOV 28, 2047 debt lost USD0.03, USD1.47 and USD1.87 respectively,

while their yields rose to 2.53% (from 2.51%), 7.15% (from 7.00%) and 7.24% (from 7.09%) respectively.

In the new week, we expect local OTC bond prices to appreciate (and yields to decrease) amid expected boost in financial system liquidity.

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