Bearish spree continued in the domestic bond market as sell pressure from the previous week lingered, as the bond auction which held Monday, 22-Jul-24 took the centre stage. The low demand witnessed at the auction and 50bps uptick in Monetary Policy Rate (“MPR”) from 26.25% to 26.75%, weakened market sentiment and drove the average FGN Bond yield up by 4bps w-o-w to 19.45% from 19.41% that was recorded in the prior week.
Sell pressure was witnessed across all maturities except the MAR-2026 and JUN-2038 which declined 1bp and closed flattish respectively. Relatively, substantial increases in the yields on JAN-2026, FEB-2034 and MAR-2050 instruments which rose 15bps, 23bps and 45bps respectively drove the market to a bearish close.
At the PMA, the Debt Management office (“DMO”) offered a total of N300.00bn across the APR-2029, FEB-2031, and MAY-2033 maturities. The auction witnessed depressed demand as all maturities on offer were undersubscribed except the MAY-2033 instrument.
Consequently, the subscription ratio closed at 0.93x (₦300.00bn offer vs. ₦279.66bn subscription) while the stop rates closed at 19.89%, 21.00%, and 21.98% for the APR-2029, FEB-2031, and MAY-2033 maturities respectively.
This week, we expect yields to remain elevated due to the hike in interest rate amidst CBN’s liquidity tightening. Investors are advised to cherry-pick attractive yields especially at the medium and long ends of the curve.
Afrinvest
