SAT, 18 JUNE, 2022-theGBJournal| Proceedings at the Treasury bonds secondary market turned bearish this week as demand weakened following investors’ positioning ahead of next week’s bond PMA and the market’s reaction to the inflation uptick (May 2022 CPI: 17.71%). Thus, the average yield across instruments expanded by 6bps to close at 11.2%.
Across the benchmark curve, the average yield expanded at the short (+25bps) end as investors sold off the APR-2023 (+97bps) bond but contracted at the mid (-2bps) and long (-1bp) segments following buying interests on the APR-2032 (-8bps) and JUL-2034 (-14bps) bonds, respectively.
In the coming week, we expect the outcome of the June 2022 FGN auction holding on Monday (20 June) to shape the direction of yields in the Treasury bond secondary market.
At the auction, the DMO will be offering instruments worth N225.00 billion through re-openings of the 13.53% FGN MAR 2025, 12.5000% FGN APR 2032 and 13.0000% FGN JAN 2042 bonds.
Notwithstanding, we reiterate our stance of an uptick in 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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