SAT 09 OCT, 2021-theGBJournal- Bearish sentiments returned to the Treasury bonds secondary market as investors continue to upwardly reprice instruments on the back of increased cut-off rates at recent auctions.
Consequently, the average yield expanded by 14bps to 11.3%. We highlight that selling activity was spread across the benchmark curve, with the average yield expanding at the short (+25bps), mid (+21bps) and long (+10bps) segments as investors sold off the JAN-2026 (+45bps), MAR-2027 (+69bps) and APR-2037 (+21bps) bonds, respectively.
The DMO published the Q4-21 bond issuance calendar on Wednesday, which showed a reduction in volumes offered (to NGN400.00-480.00 billion from NGN450.00-540.00 billion in Q3-21). Also, the short and mid dated instruments were changed to the JAN-2026 and APR-2037 bonds, respectively (previously FEB-2028 and MAR-2036).
In reaction to earlier prognosis of reduced supply by the DMO, Cordros Research reiterates their expectation of lower average yields in the medium term as investors are likely to take positions across the curve.
In the week ahead, we expect the release of September 2021 CPI (Cordros Forecast: 16.49%) to further shape market sentiments and the direction of yields.
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