Bonds’ Prices To Fall Further As Selloffs Persist
Massive sell offs by bonds holders seeking to invest in Federal Government’s Savings Bonds may have triggered fall in prices of most fixed income instruments, especially the short tenor papers.
At the bonds secondary market on Tuesday, the 2024 maturity instrument extended average benchmark yield to 13.88 per cent from 13.66 per cent recorded on Friday.
Trading in the FGN bond secondary market was also bearish, as the average yield expanded by 2 basis points (bps) to 13.6 percent.
Though the average yield was flat at the short end, it expanded at the mid (+5bps) and long (+3bps) segments due to selloffs of the APR-2032 (+10bps) and JUL-2034 (+18bps) bonds, respectively.
Analysts expect a further fall in prices of bonds as selloffs persist in the market.
Garba Kurfi of the APT Securities and Funds Limited explained that investors were showing keen interest in FGN Savings Bond because of its impressive yield.
He further explained that investors are selling off because fresh issuances may come with higher interest margin, and most investors would rather prefer to offload and wait for fresh papers.
Activities in the Treasury bills secondary market were mixed as the average yield was flat at the short end but contracted at the mid (-1bp) and long (-1bp) segments following mild interests in the 170DTM (-1bp) and 338DTM (-1bp) bills, respectively.
Similarly, the average yield contracted slightly by 1bp to 10.3 per cent in the OMO segment.
At the money market, the overnight lending rate contracted by 50 basis points to 16.8 per cent, following N10 billion inflow from OMO maturities.
The local currency, Naira, depreciated by 0.5 per cent to N441.17 per dollar at the Investors and Exporters (I&E) window.
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