The interest rates on Nigerian government bonds have dropped because more investors are putting their money into naira-based assets. This means that people are buying more government bonds, which lowers the returns (yields) investors get from them......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
The bond market showed mixed trends during the week, as some investors sold off their holdings while others bought more bonds to maximize their profits. According to CardinalStone Limited, a financial advisory firm, there was high demand for government bonds that will mature in April 2029 and July 2030, leading to a drop in their yields by 75 basis points (bps) and 19bps, respectively.
At the beginning of the week, the market leaned towards selling, with many investors offering to sell their bonds. However, some specific government bonds, like those maturing in April 2029, February 2031, and January 2035, remained in high demand.
Later in the week, investors started selling off their February 2031 and January 2035 bonds to secure their profits before the upcoming bond auction. Financial experts noted that trading was somewhat slow due to the increasing gap between buying and selling prices, and there was less demand for medium-term bonds.
Despite this, overall demand for bonds helped push down yields across different bond types. By the end of the week, the average yield on mid-term bonds had fallen due to continued investor interest.
Looking ahead, experts predict that next week’s market activities will be a mix of buying and selling, with investors being selective about which bonds they purchase. The yields on April 2029, February 2031, and January 2035 bonds declined by 73bps, 25bps, and 35bps, closing at 20.86%, 21.62%, and 21.50%, respectively.
Long-term bonds also saw some changes. For example, the yield on the June 2053 bond dropped slightly by 18bps to 17.60%. However, towards the end of the week, investors became more cautious, leading to a slowdown in trading activity as they awaited the Central Bank’s first Monetary Policy Committee (MPC) meeting of the year.
In summary, the average bond yield decreased across short-term (-39bps), mid-term (-22bps), and long-term (-2bps) bonds. The most significant drops were seen in the January 2026 (-110bps), July 2030 (-40bps), and June 2053 (-18bps) bonds, reflecting strong investor demand.