FRI, APRIL. 21 2023-theGBJournal | The Treasury bonds secondary market traded with bearish sentiments, as investors continue to exit positions across the short and long ends of the curve.
Consequently, the average yield expanded by 13bps to 13.9%. Across the benchmark curve, the average yield expanded at the short (+39bps) and long (+4bps) ends due to the sell-offs on the APR-2023 (+277bps) and JAN-2042 (+19bps) bonds, respectively.
Meanwhile, the average yield contracted at the mid (-3bps) segment following demand on the APR-2032 (-6bps) bond. At this month’s auction, the DMO offered instruments worth N360.00 billion to investors through re-openings of the 13.98% FEB 2028 bond (Bid-to-offer: 1.2x; Stop rate: 14.0%), 12.50% APR 2032 (Bid-to-offer: 0.1x; Stop rate: 14.8%), 13.00% JAN 2042 (Bid-to-offer: 1.1x; Stop rate: 15.4%), and 12.98% MAR 2050 (Bid-to-offer: 3.6x; Stop rate: 15.8%) bonds.
The subscription level settled at N444.03 billion, translating to a bid-to-offer ratio of 1.2x, with demand skewed towards the MAR 2050 bond (bid-to-offer: 3.6x).
The DMO eventually over-allotted instruments worth N552.47 billion (non-competitive allotments: N183.80 billion), resulting in a bid-to-cover ratio of 0.8x.
Next week, we expect the liquidity influx from the maturing APR-2023 bond along with coupon payments will support demand in the FGN bond secondary market and drive yields downwards in the interim.
Over the medium term, we expect an uptick in bond yields as we believe investors will demand higher yields, which will be driven by significant borrowings expected from the FG for the year.
Meanwhile, Trading Licence Holders are hereby notified that the April 2023 Issue of the Federal Government of
Nigeria (FGN) Savings Bonds was listed on the Nigerian Exchange Limited (NGX) on Thursday, 20 April 2023.
The Debt Management Office (DMO) also strongly refuted claims by certain media outlets that Nigeria has defaulted on any of its loan repayments to China.
The DMO said Nigeria remains unwaveringly committed to fulfilling its debt obligations in a responsible and timely manner.
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