Investors Cherry-Pick FGN Bonds as Yields Move in Mixed Directions…


In the just completed week, the value of FGN bonds moved in varied directions in the secondary market, prompting investors to
selectively choose maturities with attractive yields.

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The borrowing costs for the 10-year, 16.29% FGN MAR 2027, and the 15-year, 12.50% FGN MAR 2035 bonds remained unchanged at 12.53% and 14.81%, respectively, as traders adopted a cautious stance.

Conversely, the longer end of the yield curve experienced bullish activity following the release of a revised bond calendar for Q2 2023 by the Debt Management Office (DMO). Notably, the previously offered bonds (28s, 32s, 42s, and 50s) were replaced by the 29s, 33s, 42s, and 53s.

In particular, the 30 -year, 12.98% FGN MAR 2050 paper bonds (the 50s bond that was replaced) gained N0.42, while yielding 15.58% (from 15.66%). Similarly, the 20- year, 16.25% FGN APR 2037 bond appreciated by N0.87, accompanied by a decline in its corresponding yield to 15.43% (from 15.58%).

Furthermore, FGN Eurobonds traded on the international capital market witnessed appreciation across all maturities, driven
by President Bola Ahmed Tinubu’s commitment to removing fuel subsidies and unifying the multiple exchange rates .
specifically, the 10-year, 6.375% JUL 12 2023, the 20-year, 7.69% FEB 23 2038, and the 30-year, 7.62% NOV 28 2047
recorded gains of USD 0.16, USD 3.41, and USD 3.29, respectively, while their corresponding yields contracted to 12.55%
(from 13.06%), 11.94% (from 12.61%), and 11.67% (from 12.27%), respectively.

We note that traders’ sentiment will be influenced by the T-bills auction result in the course of the new week. Cowry Research
anticipates a moderation in the 364-day T-bill rate, leading to an increase in local OTC (over-the-counter) bond prices and a
decrease in yields during the forthcoming week…

Babatunde Akinsola
Babatunde Akinsola
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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