FGN Bonds Hold Steady as Yields Close Flat at 16.97% Amid Investor Caution
The Federal Government of Nigeria (FGN) bonds traded soft in the secondary market last week as investors held positions in the absence of a strong catalyst to drive activity. At the close of trading, the average yield closed flat at 16.97%, reflecting muted investor sentiment.
Investor Sentiment and Market Dynamics
• According to Credit Rating Services, bond investors remained cautious due to uncertainties in the economy, fluctuating returns, and intermittent profit-taking activities.
• Trading volumes were thin, showing that many investors chose to “wait and see” rather than take new positions.
Performance Across the Yield Curve
• Short End: Average yield expanded slightly (+1 bps), driven mainly by profit-taking on the March 2027 FGN bonds (+2 bps).
• Mid Segment: Yields contracted (-3 bps), led by bullish activity on February 2034 bonds (-24 bps). Demand was particularly strong for the 2031 and 2033 papers, where yields dropped by 25 bps and 40 bps, respectively.
• Long End: Yields remained unchanged, with little activity observed.
Treasury Bills Market
• The T-bills market closed bearish, with average yields rising 8 bps to 18.72%.
• Demand was largely focused on long-dated bills, especially the newly issued 1-year Treasury bills, which were the most actively traded.
Weekly Bond Market Highlights
• For much of the week, the FGN bonds market was quiet, with only early interest in papers maturing in 2029, 2031, 2033, and 2053.
• Activity picked up slightly toward the end of the week, with notable buying in the 2031s and 2033s, pushing their yields down.
✨ Takeaway for Investors
The flat close at 16.97% signals that investors are adopting a cautious stance, balancing between profit-taking and holding positions in anticipation of clearer economic signals. While T-bills showed bearish sentiment, selective interest in mid-tenor bonds highlights opportunities for tactical plays in the secondary market.
The Federal Government of Nigeria (FGN) bonds traded soft in the secondary market last week as investors held positions in the absence of a strong catalyst to drive activity. At the close of trading, the average yield closed flat at 16.97%, reflecting muted investor sentiment.
Investor Sentiment and Market Dynamics
• According to Credit Rating Services, bond investors remained cautious due to uncertainties in the economy, fluctuating returns, and intermittent profit-taking activities.
• Trading volumes were thin, showing that many investors chose to “wait and see” rather than take new positions.
Performance Across the Yield Curve
• Short End: Average yield expanded slightly (+1 bps), driven mainly by profit-taking on the March 2027 FGN bonds (+2 bps).
• Mid Segment: Yields contracted (-3 bps), led by bullish activity on February 2034 bonds (-24 bps). Demand was particularly strong for the 2031 and 2033 papers, where yields dropped by 25 bps and 40 bps, respectively.
• Long End: Yields remained unchanged, with little activity observed.
Treasury Bills Market
• The T-bills market closed bearish, with average yields rising 8 bps to 18.72%.
• Demand was largely focused on long-dated bills, especially the newly issued 1-year Treasury bills, which were the most actively traded.
Weekly Bond Market Highlights
• For much of the week, the FGN bonds market was quiet, with only early interest in papers maturing in 2029, 2031, 2033, and 2053.
• Activity picked up slightly toward the end of the week, with notable buying in the 2031s and 2033s, pushing their yields down.
✨ Takeaway for Investors
The flat close at 16.97% signals that investors are adopting a cautious stance, balancing between profit-taking and holding positions in anticipation of clearer economic signals. While T-bills showed bearish sentiment, selective interest in mid-tenor bonds highlights opportunities for tactical plays in the secondary market.