TUE. 28 FEB, 2023-theGBJournal| Proceedings in the FGN bond secondary market Tuesday were quiet as the average yield closed flat at 13.0%.
Across the benchmark curve, the average yield expanded at the short (+3bps) end due to profit-taking activities on the JAN-2026 (+20bps) bond but contracted at the long (-3bps) end as investors demanded the APR-2037 (-9bps) bond.
The average yield was unchanged at the mid segment.
Meanwhile, last week, the Federal Government of Nigeria (FGN) bond secondary market was bullish as the average benchmark yield for bonds fell by 12bps to close at 13.14%.
Across the curve, the yields on the 7-year (-17bps to 13.94%), 10-year (-8bps to 14.31%) bonds declined, while the yield on the 3-year bond gained 13bps to settle at 11.51%.
Our view remains that elevated Federal Government domestic borrowing will continue to drive yields upwards over the course of the year.
Trading in the Treasury bills secondary market was muted, as the average yield was unchanged at 4.0%. Similarly, the average yield closed flat at 3.8% in the OMO segment.
The market last was generally was bullish as the average yield for Tbills fell by 2bps to 4.00%. However, the yield on the 349-day T-bill closed flat at 3.79%. At the T-bill primary auction, the DMO offered and allotted N263.50bn (US$571.38m) worth of bills.
Demand was weak relative to past auctions this year. The auction recorded a total subscription of N296.75bn, implying a bid-to-cover ratio of 1.13x (vs 2.53x in the last auction). Consequently, stop rates expanded across the 91-day (+290bps to 3.00%), 182-day (+294bps to 3.24%) and the 364-day (+766bps to 9.90%, implying a 10.98% yield) bills.
Elsewhere, the average yield for secondary market OMO bills remained unchanged at 3.77%, while the yield on the 67-day OMO bill closed flat at 3.02%.
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