SAT, NOV 11 2023-theGBJournal|Proceedings in the FGN bonds secondary market closed this week on a bearish note, as the average yield advanced by 6bps to 15.7%.
Across the benchmark curve, the average yield declined at the short (-7bps) end as investors demanded the MAR-2024 (-202bps) bond but expanded at the mid (+1bp) and long (+15bps) segments following selloffs on the APR-2032 (+5bps) and MAR-2036 (+36bps) bonds, respectively.
Next week, we expect the outcome of the FGN bond primary auction scheduled to be held on Monday (13 November) to shape the direction of yields in the secondary market.
At the auction, the DMO is offering instruments worth N360.00 billion through re-openings of the 14.55% FGN APR 2029, 14.70% FGN JUN 2033, 15.45% FGN JUN 2038 and 15.70% FGN JUN 2053 bonds.
Notwithstanding, we maintain our expectation of higher yields in the FGN bonds secondary market over the short term, driven by the sustained imbalance in the demand and supply dynamics.
Meanwhile, the FGN Eurobonds market witnessed a primarily bearish trajectory, largely influenced by hawkish statements from U.S. Federal Reserve officials.
During an economic symposium on Thursday, FED Chair Jerome Powell remarked, “Fed is not confident it has done enough to bring inflation down.”
Consequently, the average benchmark yield rose by 24 basis points, ultimately stabilizing at 11.09%.
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