Tuesday, May 18, 2021

FGN Bond Yields Rise For Most Maturities Tracked as Traders Sell-off…

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In the just concluded week, bearish sentiment continued to dominate the bond market as the values of FGN bond traded at the secondary market depreciated as yields expanded for all maturities tracked.

Specifically, the 20-year, 16.25% FGN MAR 2037 lost N8.41; its corresponding yield rose to 12.46% (from 11.50%) as investors continue to sell-off on long dated bonds to mitigate interest rate risk.

Similarly, the 5-year, 14.50% FGN JUL 2021, 7- year 13.53% FGN APR 2025 and 10-year 16.29% FGN MAR 2027 lost N0.22, N0.45 and N4.03 respectively; their coreesponding yield rose to 2.60% (from 2.56%), 9.02% (from 8.92%) and 11.28% (from 10.48%) respectively.

Meanwhile, the value of FGN Eurobonds traded at the international capital market rose 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 gained USD0.24, USD2.49 and USD2.48 respectively; their corresponding yields decreased to 3.02% (from 3.15%), 7.63% (from 7.90%) and 7.67% (from 7.89%) 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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