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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.

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%).

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%).

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

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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