SAT. 18 FEB, 2023-theGBJournal| FGN bonds secondary market closed this week on a bearish note as investors showed apathy to instruments in this space in reaction to the higher-than-expected inflation reading (+21.82% y/y).
Accordingly, the average yield inched higher by 19bps to 13.3%. Across the benchmark curve, the average yield expanded across the short (+57bps), mid (+5bps), and long (+2bps) segments on the back of the selloffs on the APR-2023 (+248bps), APR-2032 (+2bps), and JUL-2034 (+16bps) bonds, respectively.
At this month’s bond PMA, the DMO offered instruments worth N360.00 billion to investors through re-openings of the 13.98% FGN FEB 2028 (Bid-to-offer: 3.3x; Stop rate: 13.99%), 12.50% FGN APR 2032 (Bid-to-offer: 0.9x; Stop rate: 14.90%), 16.25% FGN APR 2037 (Bid-to-offer: 3.3x; Stop rate: 15.90%), and 14.80% FGN APR 2049 (Bid-to-offer: 3.6x; Stop rate: 16.00%) bonds.
Demand was higher across the four instruments as the total subscription level settled higher at N993.10 billion (vs N805.16 billion in the previous auction), with the DMO allotting bonds worth N770.56 billion (translating to a bid-to-cover ratio of 1.3x).
Meanwhile, the Treasury bills secondary market also turned bearish, primarily driven by the tighter liquidity in the system, as market participants sold off instruments across the curve to satisfy their financial obligations.
Consequently, the average yield across the market expanded by 255bps to 4.0%. Across the market segments, the average yield increased in the OMO and NTB secondary markets by 247bps and 255bps to 3.8% and 4.0%, respectively.
However, the result of the upcoming NTB PMA is expected to influence the sentiments in the NTB secondary market next week.
At the auction, the CBN is set to roll over N263.50 billion worth of bills to market participants.
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