SAT 17 APRIL, 2021-theGBJournal-The Treasury bonds secondary market remained bearish, as investors reacted to another uptick in inflation (see the macros section) and stayed on the sidelines, whilst also anticipating higher rates at next week’s bond PMA. Consequently, the average yield expanded by 103bps to 11.5%.
A total of 60,714 units valued at N73.497 million were traded this week in 17 deals compared with a total of 44,303 units valued at N55.333 million transacted last week in 13 deals.
Across the benchmark curve, average yield expanded at the short (+157bps), mid (+87bps) and long (+98bps) segments, following sell-offs of the APR-2023 (+333bps), FEB-2028 (+122bps) and MAR-2050 (+212bps) bonds, respectively.
In the coming week, we expect the outcome of the auction to influence the direction of yields in the bonds secondary market. At the auction, the DMO will be offering instruments worth NGN150.00 billion through re-openings of the 16.2884% FGN MAR 2027, 12.50% FGN MAR 2035 and 9.80% FGN JUL 2045 bonds.
In the longer term, we maintain stance on continued uptick in yields, as the DMO’s intention to securitize the Ways and Means balance portends more supply of domestic debt instruments.-with Cordros Research