SAT 25 SEPT, 2021-theGBJournal- Bullish sentiments returned to the Treasury Bonds secondary market due to increased demand in anticipation of a lower yield environment following the FGN’s Eurobond issuance, and investors seeking to fill lost bids from Wednesday’s bond auction.
Consequently, the average yield contracted by 7bps to 11.2%. Cordros Research analysts highlight that buying activity was spread across the benchmark curve, with the average yield declining at the short (-15bps), mid (-12bps) and long (-8bps) segments following demand for the JAN-2026 (-41bps), MAR-2027 (-68bps) and MAR-2035 (-22bps) bonds, respectively.
At the bond auction, the DMO offered instruments worth NGN150.00 billion to investors through re-openings of the 13.9800% FGN FEB 2028 (Bid-to-offer: 1.1x; Stop rate: unchanged at 11.60%), 12.4000% MAR 2036 (Bid-to-offer: 2.5x; Stop rate: unchanged at 12.75%) and 12.9800% FGN MAR 2050 (Bid-to-offer: 3.1x; Stop rate: 13.00%, previously: 12.80%) bonds.
Following the significant level of demand (subscription: NGN334.32 billion; bid-to-offer: 2.2x), the DMO eventually over-allotted instruments worth NGN277.05 billion, resulting in a bid-to-cover ratio of 1.2x.
Cordros says they maintain their view, in the next week, of lower yields given their expectations of limited supply of debt instruments and deliberate efforts by the DMO to reduce domestic borrowing costs for the government.
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