SAT 26 JUNE, 2021-theGBJournal- The Treasury bonds secondary market closed the week on a bullish note, as yields adjusted to the lower stop rates at Wednesday’s FGN bond auction.
Consequently, the average yield expanded by 7bps to 11.9%. Across the benchmark curve, the average yield decreased at the mid (-6bps) and long (-19bps) segments due to investor’s demand for the FEB-2028 (-23bps) and APR-2037 (-63bps) bonds, respectively. However, it expanded at short (+3bps) end following sell-offs of the JUL-2021 (+15bps) bond.
At the bond auction, the DMO offered instruments worth NGN150.00 billion to investors through re-openings of the 16.2884% FGN MAR 2027 (Bid-to-offer: 1.23x; Stop rate: 12.74%), 12.5000% MAR 2035 (Bid-to-offer: 2.55x; Stop rate: 13.50%) and 12.9800% FGN MAR 2050 (Bid-to-offer: 4.48x; Stop rate: 13.70%) bonds.
Cordros Securities analysts note that the demand was stronger (subscription: NGN417.48 billion; bid-to-offer: 2.8x) compared to May (Subscription: NGN281.97 billion; Bid-to-offer: 1.9x). The DMO eventually allotted instruments worth NGN325.80 billion, resulting in a bid-to-cover ratio of 1.2x.
Cordros said they expect average yields to trend lower, ‘’as we expect investors to take advantage of the increased supply in the market and cherry-pick mid and long-dated bonds.’’
Twitter-@theGBJournal|Facebook-The Government and Business Journal|email: govandbusinessj@gmail.com
