FGN Bond Stop Rates Fall for All Maturities Auctioned amid Demand Pressure…

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In the just concluded week, DMO sold FGN bonds worth N177 billion at the primary market auction, viz: 10-year, 12.50% FGN APR 2026 worth N25.00 billion, 15-year, 12.50% FGN MAR 2035 paper worth N42.00 billon, 25-year, 9.80% FGN JUL 2045 bond worth N75.00 billion and 30-year, 12.98% FGN MAR 2050 debt worth N35.00 billion.

Given the high demand, stop rates for all maturities fell: stop rate for 10-year, 15-year and 30-year bonds fell to 6.00%(from 16.61%), 9.50% (from 11.00%) and 9.95% (from 12.15%) respectively. Also, the values of FGN bonds traded at the over-the-counter (OTC) segment appreciated further for most maturities tracked amid demand pressure.

Specifically, the 7-year, 13.53% FGN MAR 2025 note, the 10-year, 16.29% FGN MAR 2027 debt and the 20-year, 16.25% FGN APR 2037 bond appreciated by N3.28, N1.09 and N8.95 respectively; their corresponding yields fell further to 4.97% (from 5.67%), 8.00% (from 8.18%) and 9.14% (from 9.91%) respectively.

Meanwhile, the value of FGN Eurobonds traded at the international capital market rose for all maturities tracked amid renewed demand pressure.

The 10-year, 6.75% JAN 28, 2021 bond, the 20-year, 7.69% FEB 23, 2038 paper and the 30-year, 7.62% NOV 28, 2047
debt gained USD0.20, USD2.18 and USD2.52 respectively; while their corresponding yields fell to 4.23% (from
4.70%), 8.57% (from 8.84%) and 8.52% (from 8.79%) respectively.

In the new week, we expect OTC bond prices to appreciate (and yields to moderate) amid increased flight to
safety by institutional investors against the backdrop of ample financial system liquidity.

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