Analysis: Nigeria’s Bond Price Slides As Market Rallies


Trading activities in the bond market ended mixed on Tuesday amidst Debt Management Office’s (DMO) N360 billion primary market auction plan for next quarter.

Generally, the fixed income market continues to rally despite an inflation surge.

The market expects the yield curve to advance as Nigeria implements borrowing plans to close the fiscal deficit gap in its 2023 budget.

However, record demand for local debt instruments has kept yield relatively steady over time.

Recently, the market has started seeing increased spot pricing on Federal Government issuance as market, investors began to show a level of disconnect in investing in naira assets given the widening gap in real return on investments.

In the over-the-counter bond market, the prices of plain vanilla FGN bonds were largely flat, and the average secondary market yield stayed unchanged at 13.08%, investment banking firm Cowry Asset Management told clients via email.

Traders said the 20-year FGN bond was cheaper by 20 basis points as its corresponding yield rose by 4 basis points to 15.39% on Tuesday.

According to the traders in a market  brief, the 10-year FGN Bond, 15-year – FGN Bond, and 30-year FGN bond yields closed steady at 12.35%, 14.68%, and 15.00%, respectively.

Elsewhere, the value of the FGN Eurobond traded lower for most of the maturities amid sustained bearish sentiment, according to the investment firm. Consequently, the average secondary market yield expanded to 12.90%.

In the foreign exchange market, the Nigerian local currency, the Naira, strengthened against the United States (US) dollar to N461.42 from N461.67 at the Investors’ and Exporters’ FX windows.

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