Analysts Predict Stability In Fgn Bond Prices


BEVERLY HILLS, January 08, (THEWILL) – Analysts at Cowry Asset Management Limited have predicted a stability in Federal Government Bond (FGN bond) prices in the coming weeks based on bargain hunting activities amid attractive yields and relatively stable financial system liquidity.

A cursory analysis of the bond market Last week, show that FGN bond prices at the over-the- counter market declined amid sell-offs. On a weekly basis, the 20-year, 10 percent FGN JUL 2030 bond fell by N3.27 (yield rose to 11.44%), while the 10-year, 16.39 percent FGN JAN 2022 note lost N1.75 (yield increased to 11.18%).

Similarly, the 7-year, 16 percent FGN JUN 2019 paper slid by N4.07 (yield rose to 11.10%); the 5-year, 15.10 percent FGN APR 2017 debt declined by N2.66 (yield jumped to 9.83%), while, the 3-year, 13.05 percent FGN AUG 2016 bond moderated by N0.26 (yield rose to 6.15%).

Also, at the international bond market, FGN Eurobonds declined across board as sell pressure dominated investors' behaviour amid week-on-week decline in international crude-oil prices.

The OPEC basket price declined by 10.94 percent to $27.85 as of Thursday. The 10-year, 6.75 percent FGN JAN 2021 paper shed $0.04 (yield rose to 8.325%), while the 5-year, 5.13 percent FGN JUL 2018 bond lost $0.03 (yield climbed to 6.90%).

Similarly, the 10-year, 6.38 percent FGN JUL 2023 bond fell by $0.55 (yield rose to 8.57%).

At the foreign exchange market, the analysts anticipate sustained depreciation of the local currency against the backdrop of strained foreign exchange supply, particularly at the alternative market segments.

The local currency weakened last week as demand for dollar increased in the alternative foreign exchange market segments following resumption of business activities after the public holidays.

At the Bureau De Change, the Naira depreciated week-on-week (w-o-w) by 3.85 percent (or N10) against the Dollar to close at N270.00/$. The local currency also weakened at the parallel (or black) market by 3.77 percent (or N10) to N275.00/$.

However, the Naira traded steady at the official window as clearing rate remained at N197/$, while at the interbank market, the Naira closed steady at N199.10/$.

Meanwhile, forward contracts indicated possible appreciation of the Naira to the dollar for all tenors except for the spot price, which closed at N199.35/$.

Contracts for 7-day, 1 month, 3 months and 12 months appreciated w-o-w by 0.02 percent, 0.25 percent, 0.72 percent and 2.40 percent to N199.57/$, N200.96/$, N207.00/$ and N222.78/$, respectively.

Oputah David