Nigeria’s 20-Year Eurobon Yield Rises to 8.96%

Investors see the average yield on Nigeria’s 20-year Eurobond rises to 8.96 per cent in the just concluded week amidst cold participation in the fixed income market.

The surge spotted was driven by selloffs that caused the value of Federal Government of Nigeria Eurobonds traded at the international capital market to drop for most maturities tracked on renewed bearish sentiment.

At the fixed income market, the yields curve was relatively flattish as investors swing to cautious trading moods following weak market catalysts to drive an upward yield repricing.

Unfortunately, spot rates on Treasury bills were priced downward at primary market conducted by the Central Bank of Nigeria despite the reappearance of headline inflation pressures on market returns – making an investment in the space less attractive.

Despite what some fixed income traders call financial repression, subscription levels at a various primary market auction conducted in 2022 has been robust. Read: DMO Announces Borrowing Plan for First 3-Month

The 20-year, 7.69 per cent FEB 23, 2038 paper and the 30-year, 7.62 per cent NOV 28, 2047 debt lost $0.62 and $1.34 respectively, according to traders note from Cowry Asset Limited.

Analysts said these instruments corresponding yields increased to 8.96 per cent from 8.88 per cent and 8.98 per cent from 8.83 per cent respectively while the local debt market traded quietly.

However, fixed income traders said in the note that the 10-year, 6.375 per cent JUL 12, 2023 bond gained N0.11 and its corresponding yield fell further to 3.51 per cent from 3.63 per cent.

Projecting into the new week, analysts expect the value of FGN Bonds to mirror the trend in the money market amid plans by the Central Bank to auction Nigerian Treasury Bills next week.

In the just concluded week, given the muted activity in the primary market, investors swooped down on the 12 months maturities in the secondary market.

Hence, Nigerian Interbank Treasury Bills True Yield (NITTY) Fixing for 12 months maturities decreased to 5.62 per cent from 5.96 per cent ahead of an auction in the new week, according to analysts.

However, traders at Cowry Asset stated that NITTY for 1 month, 3 months and 6 months maturities increased to 2.89 per cent from 2.50 per cent, 3.45 per cent from 3.19 per cent and 4.36 per cent from 4.22 per cent respectively.

Meanwhile, despite the financial system liquidity, amid an inflow of N102.23 billion, most tenor buckets still closed northward.

In the new week, T-bills worth N238.01 billion will mature via the primary and secondary markets. Hence, analysts expect the stop rate to marginally increase as investors bid higher to compensate for the increased level of uncertainty. #Nigeria’s 20-Year Eurobond Yield Rises to 8.96%