Nigeria's bond yields increase as DMO plans N105bn action Share

In line with dealers' expectation, the Federal Government bond prices depreciated while yields increased, for most maturities as investors sold their holdings amid strain in financial system liquidity.

This is even as the Debt Management Office (DMO) said it will be auctioning a total of N105billion worth of bonds in the primary market this week.

It announced that N15.0billion, N40.0billion and N50.0billion of the FEB 2020, JAN 2026 and MAR 2036 bonds in the primary market would be sold on Wednesday 11th of May 2016.

'We expect the bonds for auction to clear at marginal rates of 12.8per cent, 13.2per cent and 13.6per cent for the FEB 2020, JAN 2026 and MAR 2036 bonds respectively. The upcoming auction in our view, coupled with a possible hike in Monetary Policy Rate (MPR) at the next Monetary Policy Committee (MPC) meeting (going by forward guidance of the CBN Governor), will likely define the dynamics of yields in the bonds market in the coming week,' dealers at Cowry Assets Management Limited stated.

In the week ahead another dealer said, barring any unexpected mop-ups, 'we expect money market rates to move in tandem with market liquidity dynamics as dictated by the FX provisioning by Deposit money Banks (DMBs) and refunds by the CBN, as well as OMO maturities and auction (about N32.0bn expected to hit the system next week Thursday).'

Week-on-week, 20-year, 10.00%FGN JUL 2030 debt depreciated by N2.12 (yield increased to13.50%);the10- year,16.39% FGN JAN 2022 bond lost N2.72 (yield rose to 13.13%); the 7-year, 16.00per cent FGN JUN 2019 softened by N1.30 (yield rose to 12.63%); while the 5-year, 15.10per cent FGN APR 2017 paper shed N0.23 (yield increased to11.32%). At the London Stock Exchange, traded FGN Euro bonds depreciated further on sell pressure-the 10-year,6.75per cent FGN JAN 2021 paper; the 5-year, 5.13 JUL12,2018 debt and 10-year,6.38per cent JUL12,2023 bond lost US$ 0.14,USD0.34 and US$0.26 respectively (corresponding yieldsrose to7.27%,5.24%and7.57%). – Tribune.