The FGN Bonds secondary market experienced a bearish trend last week, as cautious sentiment prevailed ahead of the Central Bank of Nigeria’s (CBN) 298th Monetary Policy Committee (MPC) meeting. Following the announcement of a 25bps hike in the Monetary Policy Rate (MPR) from 27.25% to 27.50%, market participants adjusted their positions, resulting in yield increases across the board. By week’s end, the average benchmark yield edged up by 5bps w-o-w, closing at 19.02%.
Furthermore, there was notable selling pressure observed at the mid and long end of the curve, as average yields advanced by 18bps and 17bps w-o-w to close at 21.87% and 20.88%, respectively. This was particularly evident in the FGN Feb-2034 and May-2033 maturities, with yields expanding by 83bps and 53bps w-o-w, respectively
Going into the week, we expect sustained tepid sentiments as investors continue to hunt for opportunities across the curve. Investors are advised to cherry-pick attractive yields, especially at the medium and long end of the curve.
T-Bills Secondary Market
The NT-Bills secondary market traded with mixed sentiments last week, as tight system liquidity (negative at ₦438.02bn as of Wednesday 27-Nov-24) continued to pressure demand. Early bullish activity was offset midweek by a bearish tone, with rising yields reflecting cautious sentiment among investors. By the end of the week, the average benchmark yield climbed 76bps w-o-w, settling at 23.05%.
In detail, sell-offs were predominantly witnessed at the short and long end of the curve. Notably, maturities such as the 5-Dec-2024 and 9-Oct-2025 saw significant yield expansions of 223bps and 263bps, respectively. Conversely, the mid-end of the curve closed relatively flat for the week, with mild demand recorded in select mid-tenor instruments.
This week, the Debt Management Office (“DMO”) is set to conduct a Primary Market Auction (PMA) on Wednesday, offering ₦583.25bn across the 91-, 182-, and 364-day tenors.
This week, we expect a cautious start to the week as market participants position ahead of the auction. Thus, we advise investors to position in relatively attractive bills across the yield curve, while also remaining alert for possible corporate offerings.
