SAT, DEC 16 2023-theGBJournal|The Treasury bonds secondary market sustained its bullish performance as investors sought to cover lost bids at Monday’s auction. Consequently, the average yield contracted by 48bps to 14.4%.
Across the benchmark curve, the average yield declined at the short (-55bps) and long (-84bps) ends due to demand for the MAR-2024 (-171bps) and JAN-2042 (-117bps) bonds, respectively.
Elsewhere, the average yield expanded at the mid (+6bps) segment following the sell-off of the APR-2029 (+23bps) bond.
At this month’s auction, the Debt Management Office (DMO) offered instruments worth N360.00 billion to investors through re-openings of the 14.55% FGN APR 2029 (Bid-to-offer: 1.9x; Stop rate: 15.5%), 14.70% FGN JUN 2033 (Bid-to-offer: 0.6x; Stop rate: 16.0%), 15.45% FGN JUN 2038 (Bid-to-offer: 1.3x; Stop rate: 16.5%), and 15.70% FGN JUN 2053 (Bid-to-offer: 6.1x; Stop rate: 17.2%) bonds.
The subscription level settled at N886.41 billion, translating to a bid-to-offer ratio of 2.5x, with demand skewed towards the MAR 2053 bond (bid-to-offer: 6.1x).
The DMO eventually under-allotted instruments worth N273.63 billion, resulting in a bid-to-cover ratio of 3.2x.
During the week, the FGN Eurobonds market witnessed a primarily bullish trend, driven by the dovish stance of the U.S. Federal Reserve. Consequently, the average benchmark yield dropped by 53 basis points, stabilizing at 9.84%.
Over the short term, we expect yields in the FGN bonds secondary market to trend higher, driven by the sustained imbalance in the demand and supply dynamics.
The Treasury bonds secondary market sustained its bullish performance as investors sought to cover lost bids at Monday’s auction
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