SAT 20 NOV, 2021-theGBJournal- The Treasury bonds secondary market snapped the mixed trading sentiments recorded in the last two weeks and traded with bearish sentiments as investors took profits on their bond auction winnings and reacted to the increased stop rate of the longer dated instrument on offer. Accordingly, the average yield expanded by 7bps to 11.1%.
Across the benchmark curve, the average yield declined at the short (-3bps) end following sustained demand for the JAN-2026 (-15bps) but expanded at the mid (+13bps) and long (+5bps) segments as investors upwardly repriced the JUL-2030 (+24bps) and JUL-2034 (+10bps) bonds, respectively.
At the bond auction, the Debt Management Office (DMO) offered instruments worth NGN150.00 billion to investors through re-openings of the 12.5000% FGN JAN 2026 (Bid-to-offer: 1.0x; Stop rate: unchanged at 11.65%), 16.2499% FGN APR 2037 (Bid-to-offer: 0.9x; Stop rate: unchanged at 12.95%) and 12.9800% FGN MAR 2050 (Bid-to-offer: 3.4x; Stop rate: 13.30%, previously: 13.20%) bonds. Following the significant level of demand (subscription: NGN267.15 billion; bid-to-offer: 1.8x), the DMO eventually over-allotted instruments worth NGN225.25 billion, resulting in a bid-to-cover ratio of 1.2x.
A total of 65,606 units valued at N68.507 million were traded this week in 9 deals compared with a total of 56,655 units valued at N60.795 million transacted last week in 26 deals.
Next week, we maintain our view of lower yields given our expectations of limited supply of debt instruments and deliberate efforts by the DMO to reduce domestic borrowing costs for the government.-With Cordros Research
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