The Nigerian local debt market was bullish following an increase in benchmark interest rate by the monetary committee of the Central Bank in a bid to continue fighting inflation.
In the first quarter of 2023, the debt management office has indicated a plan to raise N1.2 trillion from the market.
Though buying interest remains high in the fixed-income market, a strong inflation rate has however reduced real return on investment at the same time when investors’ portfolio size has been impacted significantly in dollar terms.
Trading pattern in the fixed income market has been uptick due to robust liquidity in the financial system. This triggered higher subscription levels at the primary market auctions conducted by the CBN in 2023, thus forcing spot rates across 90-day, 181-day, and 364-day bills downward.
At the close of trading in the secondary market, the average yield on Nigerian Treasury bills contracted by 7 basis points to 3.4%.
Across the curve, analysts at Cordros Capital said in a market brief that the average yield declined at the short (-15bps) end as participants demanded the 30-day to maturity (-107bps) bill.
Meanwhile, the yield curve ended flattish at the mid and long segments. Meanwhile, the average yield was flat at 2.9% in the open market operations (OMO bills) segment.
In the bond market, the prices of FGN bonds increase as investors go bullish on dated instruments though the average yield contracted by 5 basis points to 13.35%. Across the benchmark curve, the average yield dipped at the short (-15bps) end following investors’ interest in the MAR-2024 (-56bps) bond.
Conversely, the average yield closed flat at the mid and long segments. Specifically, the yield on the 30-year debt decreased by 46 basis points (0.46%) to 14.96%. On the flip side, the 20-year paper was cheaper by 38 bps to 15.35%. Meanwhile, the yields on the 10-year and 15-year bonds stayed steady at 14.58% and 15.29%, respectively.
Elsewhere, the value of the FGN Eurobond decreased for most of the maturities tracked amid sustained bearish activity, according to Cowry Assets. Analysts revealed that the average secondary market yield increased to 10.73%
In the money market, the overnight lending rate contracted by 100 basis points to 10.2%, following the inflow from FGN bond coupon payment worth N21.44 billion.