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FGN Bond Prices Rise on Buy Pressure

By Cowry Asset

In the just concluded week, CBN on behalf of Debt Management Office auctioned FGN bonds worth N100 billion, viz: 5-year 14.50% FGN JUL 2021 paper worth N50 billion and 10-year, 16.29% FGN MAR 2027 bond worth N50 billion. Their respective marginal rates moderated to 3.19% and 3.21% from 14.79% and 14.80% in line with our expectation.

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Meanwhile, against the backdrop of boost in financial system liquidity, local OTC bond prices gained (and yields fell) across the maturities tracked amid sustained bargain hunting activity.

Specifically, the 20-year, 10.00% FGN July 2030 bond, the 10-year, 16.39% FGN JAN 2022 paper, the 7-year, 16.00% FGN JUN 2019 paper and the 5-year, 14.50% FGN JUL 2021 paper gained N1.80, N2.42, N1.74 and N3.46 respectively while their corresponding yields declined to 14.00% (from 14.38%), 13.60% (from 14.35%), 13.70% (from 14.98%) and 13.32% (from 14.56%).

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Elsewhere, FGN Eurobonds prices gained across the maturities on the back of renewed bargain hunting activity on the London Stock Exchange.

Specifically, the 10-year bonds, 6.75% JAN 28, 2021 and 6.38% JUL 12, 2023 shed N0.30 and N0.83 respectively (corresponding yields decreased to 4.55% and 5.12% from 4.66% and 5.29% respectively) while the 5-year, 5.13% JUL 12, 2018 bond gained N0.13 (yield fell to 3.19% from 3.46%).

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This week, we anticipate bargain hunting at the OTC market, with resultant price increase amid expectation of boost in liquidity.

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Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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