In the just concluded week, the Debt
Management Office offered and allotted,
respectively, N360 billion (90 apiece) and
N563.36 billion worth of bonds across
13.98% FGN FEB 2028, 12.50% FGN APR
2032, 16.25% FGN APR 2037, and 14.80%
FGN APR 2049 re-openings.
The marginal rates for the 32s, 37s, and 49s contracted to 14.75% (from 14.90%), 15.20% (from
15.90%), and 15.75% (from 16.00%),
respectively, while the marginal rate for the
28s expanded to 14.00% (from 13.99%).
Notably, the bid-to-cover ratios for the 37s (3.95x) and 49s (3.88x) were significantly higher than those for the 28s (0.81x) and 32s (0.34x), indicating stronger demand for the longer-term bonds.
Overall, demand increased compared to the last auction, as implied by the 1.43x bid-to-cover ratio (from 1.29x), notwithstanding a decrease in allotments and subscriptions.
Despite the lower stop rates, the values of FGN bonds traded on the secondary market moderated as yields increased for most maturities tracked.
Specifically, the 10-year 16.29% FGN MAR 2027 and the 30-year 12.98% FGN MAR 2050 notes fell by N0.24 and N0.83, respectively; their corresponding yields expanded to 12.1% (from 12.45%) and 15.15% (from 15.00%), respectively.
On the other hand, the yield on the 15-year 12.50% FGN MAR 2035 remained unchanged at 14.69%, while the 20-year 16.25% FGN APR 2037 increased by N3.44 as its corresponding yield contracted to 14.83% (from 15.40%).
Meanwhile, the value of FGN Eurobonds traded on the international capital market appreciated for all maturities tracked due to renewed bullish sentiment.
Specifically, the 10-year 6.38% JUL 12 2023, the 20-year 7.69% FEB 23 2038, and the 30- year 7.62% NOV 28 2047 gained USD 0.18, USD 0.36, and USD 0.03, while their corresponding yields decreased to 14.26% (from 14.41%), 13.64% (from 13.72%), and 13.20% (from 13.21%), respectively..
In the new week, we expect local OTC bond prices to rise (and yields to decrease) as prospective investors demand lower rates in tandem with rates in the primary market
