Investors Demand Higher Yields as DMO Increases Rate for 50s Maturities…

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In the just concluded week, the DMO allotted N225.25 billion worth of bonds; viz N37.15 billion for the 12.50% FGN JAN 2026, N32.19 billion for the 16.25% FGN APR 2037 and N155.91 billion for the 12.98% FGN MAR
2050.

Stop rates for 26s and 37s stood flattish at 11.95% and 12.95% respectively.

However, stop rate for 50s marginally rose to 13.30% (from 13.20%).

Also, the value of FGN bonds was bearish for most maturities we tracked in the secondary market as investors reacted to the marginal increase in 50s maturity.

Particularly, the 10-year 16.29% FGN MAR 2027 bond and the 20-year 16.25% FGN MAR 2037 paper lost N0.38 and N0.54 respectively; their corresponding yields rose to 11.76% (from 11.68%) and 12.95% (from 12.88%) respectively.

On the flip side, the 10-year 13.98% FGN MAR 2028 debt gained N0.05; its corresponding yield fell to 11.56% (from 11.59%).

However, the 5-year, 13.53% FGN APR 2025 paper stood flattish at 9.63%. Elsewhere, the value of

FGN Eurobonds traded at the international capital market depreciated for all maturities tracked; the 10-year, 6.375% JUL 12, 2023 bond, the 20-year, 7.69% FEB 23, 2038 paper and the 30-year, 7.62% NOV 28, 2047 debt lost USD0.14, USD2.04 and USD2.13 respectively; their corresponding yields rose to 4.22% (from 4.16%), 8.37% (from 8.13%) and 8.45% (from 8.24%) respectively.

In the new week, we expect local OTC bond prices to decrease (and yields to increase) as traders react to higher rates, especially for the 50s maturities.

Hence, we note that the rise in rate for 50s in the primary market provides buy opportunities going forward.