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Treasury bonds average yield declines by 7bps to 8.0% to end week, buying interests witnessed on the Nov-2029, Jul-2030 and Mar-2050 bonds


SAT 06 FEB, 2021-theGBJournal- Proceedings in the Treasury bonds secondary market turned bullish, as investors took the double-digit yield level of some longer dated instruments, as a good re-entry point into the bond market.

Consequently, average yield declined by 7bps to 8.0%. Across the benchmark curve, market interest piqued on mid (-21bps) and long (-23bps) dated instruments, with major buying interests witnessed on the NOV-2029 (-21bps), JUL-2030 (-21bps) and MAR-2050 (-51bps) bonds. Conversely, the average yield expanded at the short (+13bps) end, as investors sold-off on the JAN-2022 (+72bps).

As a result of the shock higher stop rates at this week’s OMO auction, we expect market participants to demand higher secondary market yields, especially for the longer dated instruments. In the longer term, we still expect yields in the bonds secondary market to temper, given the limited supply amidst significant inflows from CBN special bill maturities (c. NGN4.00 trillion) and FGN bond coupon payments (c. NGN500.00 billion).

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