MON, SEPT 18 2023-theGBJournal |Trading in the FGN bond secondary market was bearish, as the average yield expanded by 4bps to 14.4%.
Across the benchmark curve, the average yield advanced at the short (+19bps) end due to the sell-off of the MAR-2024 (+84bps) but dipped at the mid (-1bp) and long (-2bps) segments following the demand for the APR-2029 (-4bps) and JUN-2053 (-21bps) bonds, respectively.
Last week in the FGN bond market, the Debt Management Office (DMO) offered N360.00bn across the April 2029, June 2033, June 2038, and June 2053 maturities with most of the demand skewed to the 30-year bonds.
Demand was lower than at the last auction in August, as reflected by a total subscription of N290.99bn (N312.56bn at the last auction) and a bid-to offer ratio of 3.23x (vs 3.47x at the last auction).
Yields increased across three tenors; the 10-year bond by 75bps to 15.45%, the 15-year bond up by 10bps to 15.55%, and the 30-year bond up by 55bps to 16.25% while the 6-year bond slipped by 5bps to 14.50%.
A total of N251.49bn was eventually allotted, including non-competitive allotments of N65.00bn. The secondary market for FGN bonds moved in the same direction as the secondary market for T-bills.
The average yield increased by 23bps to 14.40%. Average yields along the FGN bond yield curve rose: at the short end (34bps to 12.41%), mid-end (12bps to 14.66%) and long end (26bps to 15.63%).
At the Treasury bills secondary market activities were bullish, as the average yield declined by 11bps to 7.9%.
Across the curve, the average yield declined at the short (-111bps) end as participants demanded the 66DTM (-138bps) bill but expanded at the mid (+38bps) and long (+2bps) segments due to the sell-off of the 178DTM (+85bps) and 192DTM (+72bps) bills, respectively.
In the secondary market for T-bills last week, performance was bearish as average yields slipped by 4bps to 7.98% pa. Average yields at the medium and long-end of the yield curve rose to 5.98% and 9.89% respectively, while the short-end tightened marginally by 1bp to 4.24%.
The CBN offered N152.20bn (US$200.76m) at the primary T-bill auction last week; total subscription settled at N643.88bn, 26.48% lower than the previous auction. The bid to offer ratio was 4.23x (vs 4.08x at the previous auction). The average yield at auction rose by 81bps to 8.83% per annum.
Elsewhere, the average yield expanded by 14bps to 13.4% in the OMO segment.
The naira depreciated by 2.2% to N773.98/USD at the I&E window.
Meanwhile, the overnight lending rate contracted significantly by 771bps to 16.7%, following the inflows from FGN bond coupon payments (N134.70 billion).
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