Bond market to continue bearish trend as investors lock yields in NTB market in hope of softer rates
BOND MARKET IS expected to continue its bearish run this week as investors shift positions to the treasury bills market to lock in yield in the event that rates will soften.
The bond market has been on a 3 week bearish run as investors have been in search of favourable investment.
Activities in the Treasury bonds market last week were seemingly bearish as the average yield across instruments increased by 5 basis points to 14.2 percent.
There were yield increases recorded across the market, save for on five instruments, which recorded yield declines. The 14.50 percent JUL-2021 instrument recorded the largest decline (-9bps), while the 16.2499 percent APR-2037 bond recorded the largest increase (+20bps).
The DMO held a Treasury bonds PMA auction during the week, on the 25th, when three instruments were auctioned to investors, all through re-openings. There were oversubscriptions recorded on the 14.55 percent APR-2029 (Bidto-offer: 1.66x, Stop rate: 14.39 percent), and 14.80 percent APR 2049 (Bid-tooffer: 1.16x, Stop rate: 14.39 percent) instruments, while the 12.75 percent APR-2023 (Bid-to-offer: 0.32x, Stop rate: 14.39 percent) instrument recorded an under subscription.
The values of FGN bonds traded at the over-the-counter (OTC) segment went in mixed directions. Specifically, the 10-year, 16.29 percent FGN MAR 2027 debt and the 20-year, 16.25 percent FGN APR 2037 lost N0.91 and N1.37 respectively; their corresponding yields rose to 14.34 percent from 14.15 percent and 14.49 percent from 14.29% percent respectively.
However, the 5-year, 14.50 percent FGN JUL 2021 paper and the 7-year, 13.53 percent FGN MAR 2025 bond gained N0.13 and N0.16; their corresponding yields fell to 14.48 percent and 14.30 percent respectively.
Meanwhile, the values of the FGN Eurobonds traded at the international capital market fell for all maturities tracked: the 10-year, 6.75 percent JAN 28, 2021, the 20-year, 7.69 percent FEB 23, 2038 and the 30-year, 7.62 percent NOV 28, 2047 bonds lost USD0.04, USD1.47 and USD1.55 respectively; their corresponding yields rose to 4.02 percent, 7.50 percent and 7.71 percent respectively.