Average yields on Nigeria’s mid and long-term bond tenors rose by 1 basis point and 3 basis points to 14.21 percent and 14.47 percent, respectively, while Nigeria’s benchmark 10-year bond yield rose by 13 basis points to 14.38 percent.
The Nigerian bond market commenced the second half of the year on a positive note as sustained investor appetite for no-risk assets plunged yields on Nigerian government bonds to their weakest level in three months.
“Bond yields had risen to attractive level following the selloffs that we had last month,” Abimbola Omotola, fixed income analyst at Lagos-based Chapel Hill Denham, told BusinessDay. The decline was as a result of “renewed appetite for bonds as investors to get more duration exposure”.
In spite of the negative performance at the bond market, the treasury bills (T-Bills) market was largely bullish as benchmark discount rates fell by 15 basis points to 11.52 percent with the mid-segment recording the most buy-ins.
Rates at the mid-segment of the market fell by 40 basis points to 11.42 percent, while rates on shorter days- to-maturity declined by18 basis points to 10.98 percent. For the long-end of the market, rates fell by 10 basis points to 12.02 percent.
The CBN is expected to roll over a total of N88.86 billion at the Primary Market Auction (PMA) across the short, medium and long-term maturities as an equal amount in the 91-day, 182-day and 364-day instruments would matureon Thursday, June 4.
This will consist of N10 billion for the short-term, N20 billion for the medium-term, and N58.9 billion for the long term maturities.
The expected stop rates for the 91-day tenor maturity are put at between 9.6 and 10 percent as against the previous stop rate of 9.6 percent. For the 182-day tenor maturity, the expected stop rates are between 11.7 and 11.9 percent compared with 11.89 percent stop rates declared on the instrument previously.
The stop rates for the 364-day tenor maturity, which stood at 12.02 percent previously, are projected to range between 11.9 and 12.10 percent
Investors had shown a high level of demand for the June Federal Government of Nigerian bond auction conducted by the Debt Management Office (DMO) on Wednesday, June 26, where instruments totalling N100 billion were offered to the investing public at 5, 10 and 30-year maturities with the long-term offer enjoying the most buying interest.
“Subscription for the three instruments from competitive bids was slightly above N160 billion, indicating an oversubscription of 60 percent,” the debt agency said in a release on the auction.
Analysts at Afrinvest Securities Limited said they have a bullish outlook for the secondary market this week on the back of rising liquidity in the financial system.
“We expect persistent buying interests within the bonds secondary market as investors seek to place their lost auction bids, further pressuring yields downwards,” the analysts said in a note to clients on Monday.
