SAT 13 NOV, 2021-theGBJournal- Though with a slight bullish bias, mixed trading persisted in the Treasury bonds secondary market, as investors remained on the sidelines awaiting the NTB auction outcome for a clearer direction on FI yields.
The average yield pared marginally by 1bp to 11.3%. Across the benchmark curve, the average yield declined at the short (-11bps) end following demand for the MAR-2025 (-96bps) bond. Elsewhere, it expanded at the mid (+4bps) segment as investors sold off the FEB-2028 (+6bps) bond while the long end remained unchanged.
Next week, we expect the outcome of the bond auction to shape market sentiments and the direction of yields. At the auction, the DMO will be offering instruments worth c. NGN150.00 billion through re-openings of the 12.50% FGN JAN 2026, 16.2499% FGN APR 2037 and 12.98% FGN MAR 2050 bonds.
Nonetheless, in the short-term, we expect yields to hover around current levels, given our expectations of limited supply in Q4-21 and deliberate efforts by the DMO to reduce the government’s domestic borrowing cost.
A total of 56,655 units valued at N60.795 million were traded this week in 26 deals compared with a total of 32,626 units valued at N33.332 million transacted last week in 16 deals.
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