In the just concluded week, bullish sentiment dominated the market as the values of FGN Bonds tracked increased as traders offered lower yields.
Also, the crash in rates for treasury
bills at the primary market contributed to the bullish momentum seen at the longer part of the yield curve.
In line with the declining yields in the money market, yields at the secondary market fell further for most maturities tracked.
The 5-year 13.53% FGN APR 2025, 10-year
13.98% FGN MAR 2028, 10-year 16.29% FGN
MAR 2027 and the 20-year, 16.25% FGN MAR 2037 gained N1.17, N1.10, N7.24 and N2.16 respectively; their corresponding yields fell to 10.90% (from 11.30%), 12.22% (from 12.25%), 11.99% (from 12.30%) and 12.75% (from 13.03%) respectively.
Meanwhile, the value of FGN Eurobonds traded at the international capital market rell for all maturities tracked; the 10-year, 6.375% JUL 12, 2023, the 20-year, 7.69% FEB 23, 2038 paper and the 30-year, 7.62% NOV 28, 2047 debt lost USD0.16, USD0.92 and USD0.86 respectively; their corresponding yields rose to 2.98% (2.92%), 7.60% (from 7.51%) and 7.73% (from 7.65%) respectively.
We suspect that the sustained decline in Eurobond yields may be on the back of expectations of a positive foreign exchange outlook and the need to avoid exchange rate losses.
In the new week, the DMO will auction N150 billion worth of local bonds; viz: N50 billion (a piece) for the 13.98% FGN FEB 2028, 12.40% FGN MAR 2036 and 12.98% FGN MAR 2050 Re-Openings.
Hence, we expect the stop rates to moderate – mirroring the drop in the money market rate for 364-day bill – amid anticipated firm demand.