SAT 19 MARCH, 2022-theGBJournal| The Treasury bonds secondary market retraced this week and turned bearish, as only a handful of trades were consummated following weakened demand.
Cordros Research analysts say they suspect that investors held on to idle funds in anticipation of next week’s PMA.
Accordingly, the average yield expanded by 10bps to 10.5%. Across the benchmark curve, despite the weakened activity levels, we still witnessed cherry-picking on attractive mid- to long-dated instruments.
Precisely, the average yield across the curve declined at the short (-22bps), mid (-27bps) and long (-8bps) segments as investors demanded the APR-2023 (-154bps), JUL-2034 (-45bps) and MAR-2036 (-33bps) bonds, respectively.
In the coming week, we expect the outcome of the March 2022 FGN auction holding on Monday (March 21) to influence the direction of yields in the bonds secondary market.
At the auction, the DMO is offering instruments worth NGN150.00 billion through re-openings of the 12.5000% FGN JAN 2026 and 13.0000% FGN JAN 2042 bonds. We maintain our yield uptick stance in the medium term, as the FGN’s borrowing plan (NGN2.57 trillion) for 2022FY points to elevated supply.
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