SAT, 30 APRIL, 2022-theGBJournal | Similarly, the Treasury bonds secondary market traded with bearish sentiments, as demand for FGN bonds remained tepid, with only a handful of trades passing through during the week. As a result, the average yield expanded by 9bps to 11.2%.
Across the benchmark curve, the average yield expanded at the short (+14bps) and long (+6bps) ends following investors’ profit-taking activities on the MAR-2025 (+80bps) and APR-2037 (+22bps) bonds, respectively; but contracted at the mid (-2bps) segment as investors sold of the FEB 2028 (-5bps) bond.
The DMO conducted the April 2022 FGN bond PMA on Monday (25 April). At the auction, instruments worth NGN225.00 billion were offered to investors through a new issue bond; APR 2032 bond (Bid-to-offer: 1.0x; Stop rate: 12.5%) and re-openings – 13.53% MAR 2025 (Bid-to-offer: 1.5x; Stop rate: 10.0%) and 13.00% JAN 2042 (Bid-to-offer: 3.0x; Stop rate: 12.9%).
Total subscriptions across the offer instruments settled at NGN409.41 billion, with the DMO eventually allotting instruments worth NGN348.58 billion (of which NGN128.70 billion was allocated to non-competitive bids), resulting in a bid-cover ratio of 1.2x.
We maintain our view of an uptick in bond yields in the medium term, as the FGN’s borrowing plan for 2022FY and expected fiscal deficit point towards an elevated supply.
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