TUES, 28 JUNE, 2022-theGBJournal| Last week, trading in the Federal Government of Nigeria (FGN) bond secondary market was bullish as market participants sought to recover lost bids from the bond auction.
As a result, the average benchmark yield for bonds fell by 5bps to close at 11.14%. Notably, the yield on the 3-year (-3bps to 10.09%) and the 10-year (-5bps to 11.60%) bonds declined, while the yield on the 7-year (+6bps to 10.88%) bond expanded. At last week’s primary auction, the Debt Management Office (DMO) allotted a total of N226.12bn (US$538.16m).
Demand was strong as reflected by a total subscription of N552.36bn and a bid-to-offer ratio of 2.45x. Nevertheless, yields across the March 2025 (+10bps to 10.10%), April 2032 (+5bps to 12.50%) and January 2042 (+15bps to 13.15%) maturities expanded.
‘’We are still looking for bond rates to increase if, as expected, issues of government debt increase going forward,’’ says analysts at Coronation Research.
Meanwhile, activity in the Treasury Bill (T-Bill) secondary market was bearish as tight market liquidity induced selloffs. Consequently, the average yield rose by 15bps to 4.79%. However, the yield on the 321-day T-bill fell slightly by 1bp to close at 6.09%.
At the T-bill auction this week, the Debt Management Office (DMO) is expected to offer N174.09bn worth of instruments. Elsewhere, the average yield for OMO bills rose by 59bps to 5.17%, while the yield on the 312-day OMO bill expanded by 127bps to 5.74%.
Twitter-@theGBJournal| Facebook-The Government and Business Journal|email: gbj@govbusinessjournal.ng|govandbusinessj@gmail.com
