Bonds: Investors hold positions as average yield closed flat at 16.97%

In the secondary market, bonds from the Federal Government of Nigeria (FGN) showed weakness as there was no strong catalyst to boost the low enthusiasm among investors, resulting in an average yield that remained unchanged at 16.97%.

According to credit rating agencies, bond investors kept their positions close due to economic uncertainties, changing returns, and occasional profit-taking.

At the end of the trading day, the investment firm noted that the average yield was steady at 16.97%, attributing this to low trading volume in the secondary market.

The Credit rating agencies reported, “Within the benchmark curve, the short end saw yields increase slightly (+1 basis point) due to profit-taking on the March-2027 FGN bonds (+2 basis points). Mid and long-term yields stayed the same.

“On the curve, mid-term yields dropped slightly (-3 basis points) as a result of sell-offs on the February-34 bonds (-24 basis points). There was some bullish movement in the mid tenors, with significant yield reductions on the Nigerian bonds maturing in 2031 and 2033, although only a few transactions occurred.”

Additionally, the Credit rating agencies mentioned, “The treasury bills market closed the day negatively, with the average yield rising by 8 basis points to reach 18.72%.

Interest remained primarily on long-dated options (+14 basis points), especially with the newly issued 1-year Treasury bills emerging as the most traded instrument. The FGN bonds market was generally quiet throughout the week, with minimal activity noted. Some initial interest appeared in the 2029, 2031, 2033, and 2053 bonds, but with low volumes.

“Activity did pick up a bit later on, as purchases in the 2031 and 2033 bonds led to yield reductions of 25 basis points and 40 basis points, respectively.”