Monday, September 27, 2021

    FGN Bond Stop Rate Rises for all Maturities Offered…

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    Godwin Okafor
    Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

    In the just concluded week, the DMO offered via auction N150 billion worth of bonds; viz N50 billion (a piece) for the 16.29% FGN MAR 2027, 12.50% FGN MAR 2035 and 9.80% FGN MAR 2045 re-openings but sold N157.95 billion across the three maturities on offer.

    Stop rates jumped to 12.25% (from 10.50%), 13.34% (11.50%) and 13.85% (from 12.00%) respectively.

    Also, the values of FGN bonds traded in the secondary market decreased as yields rose for most maturities tracked.

    Specifically, the 5-year, 14.50% FGN JUL 2021 and 7-year, 13.53% FGN APR 2025 lost N0.34 and N0.01 respectively; their corresponding yields rose to 3.01% (from 2.54%) and 11.03% (from 11.02%) respectively.

    However, the 10-year 16.29% FGN MAR 2027 gained N0.16, its yield decreased to 12.25% (from 12.30%); while the 20-year, 16.25% FGN MAR 2037 closed flat at a yield of 13.29%.

    Meanwhile, the value of FGN Eurobonds traded at the international capital market fell 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 USD0.18, USD0.13 and USD0.44 respectively; their corresponding yields increased to 2.95% (from 2.90%), 7.39% (from 7.38%) and 7.52% (from 7.49%) respectively.

    In the new week, we expect local OTC bond prices to moderate (and yields to increase) as prospective investors demand higher rates in tandem with rates in the primary market.

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