Bond Prices Rally on Bargain Hunting Activity …

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In line with our expectation, the value of FGN bonds traded at the over-the-counter (OTC) segment appreciated (and yields fell) for most maturities tracked against the backdrop of boost in financial system liquidity.

Specifically, 5-year, 14.50% FGN JUL 2021 paper and the 10-year, 16.29% FGN MAR 2027 debt gained N6.41 and N0.36 respectively; their corresponding yields fell to 13.91% (from 14.49%) and 14.24% (from 14.32%) respectively. However, the 20-year, 16.25% FGN APR 2037 instrument fell by N0.43 while its yield rose to 14.51% (from 14.45%).

Elsewhere, the value of the FGN Eurobonds traded at the international capital market depreciated further for most maturities tracked amid sustained profit taking activity – the 20-year, 7.69% FEB 23, 2038 and the 30-year, 7.62% NOV 28, 2047 bonds lost USD1.46 each; their corresponding yields increased to 8.35% (from 8.19%) and 8.55% (from 8.40%) respectively.

In the new week, we expect FGN bond prices to increase (with corresponding fall in yields) at the OTC market amid bargain hunting activity on the back of expected ease in financial system liquidity.

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