SAT NOV 23 2024-theGBJournal|The FGN bond secondary market were mixed this week, underpinned by investors who sought to take advantage of the attractive yield on the MAR-2025 bond amid sell-offs due to expectations of higher yields after next week’s MPC meeting.
Subsequently, the average yield pared by 3bps to 19.4%. Across the benchmark curve, the average yield declined at the short (-43bps) end, following demand for the MAR-2025 (-210bps) bond, while it expanded at the mid (+22bps) segment, driven by sell-offs of the FEB-2031 (+64bps) bond.
The average yield was unchanged at the long end. At Monday’s PMA, the Debt Management Office (DMO) offered instruments worth N120.00 billion to investors through re-openings of the 19.30% FGN APR 2029 (Bid-to-offer: 1.3x; Stop rate: 21.00%) and 18.50% FGN FEB 2031 (Bid-to-offer: 4.9x; Stop rate: 22.00%).
The total subscription level settled at N369.59 billion (previous: N389.24 billion), with a bid-to-offer ratio of 3.1x (previous: 2.2x).
Eventually, the DMO allotted instruments worth NGN346.16 billion across the two tenors, resulting in a bid-to-cover ratio of 1.0x.
Similarly, we expect market participants to take cues from the decision of the monetary policy authority next week.
Meanwhile, we maintain our short-term expectation of yields remaining elevated consequent to anticipated monetary policy administration globally and domestically and sustained imbalance in the demand and supply dynamics.
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