SAT, JUNE 24 2023-theGBJournal |This week, the FGN bonds secondary market closed on a mixed note but with a bullish undertone, as investors looked to cover for their lost bids at Monday’s PMA.
As a result, the average yield across all instruments pared by 1bp to 13.8%. Across the benchmark curve, the average yield dipped at the short (-33bps), mid (-20bps), and long (-12bps) segments, following buying interests in the MAR-2027 (-91bps), APR-2032 (-30bps), and MAR-2050 (-67bps) bonds, respectively.
At this month’s auction, the DMO offered instruments worth N360.00 billion to investors through re-opening of the 14.55% FGN APR 2029 (Bid-to-offer: 1.7x; Stop rate: 13.90%) and new issuances of the 14.70% FGN JUN 2033 (Bid-to-offer: 0.4x; Stop rate: 14.70%), 15.45% FGN JUN 2038 (Bid-to-offer: 1.7x; Stop rate: 15.45%), and 15.70% FGN JUN 2053 (Bid-to-offer: 3.3x; Stop rate: 15.70%) bonds.
The subscription level settled at N635.12 billion, translating to a bid-to-offer ratio of 1.8x (vs bid-to-offer ratio of 1.3x at last month’s auction).
Eventually, the DMO allotted instruments worth N473.16 billion (including non-competitive allotments of N46.00 billion), resulting in a bid-to-cover ratio of 1.3x.
Meanwhile, a total of 106,871 units valued at N106.464 million were traded this week in 26 deals compared with a total of 46,043 units valued at N50.724 million transacted last week in 25 deals.
We maintain our view that for the year that the significant borrowing profile by FG will result in an uptick in bond yields, as investors demand higher yields in the face of elevated supply.
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