Dipo Olowookere
By Cowry Asset
Against the backdrop of boost in financial system liquidity, local OTC bond prices appreciated (and yields decreased) across the maturities tracked following renewed 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 increased by N1.29, N0.50, N0.09 and N1.32 respectively while their corresponding yields declined to 14.51% (from 14.66%), 14.36% (from 14.52%), 14.98% (from 15.05%) and 14.56% (from 15.05%).
Elsewhere, FGN Eurobonds prices tanked across the maturities amid sustained profit taking 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 N0.21 respectively (corresponding yields increased to 4.66% and 5.29% from 4.57% and 5.26% respectively) while the 5-year, 5.13% JUL 12, 2018 bond lost N0.10 (yield rose to 3.46% from 3.35%).
This week, CBN on behalf of Debt Management Office will auction 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.
We expect their marginal rates to trek southwards from their previous stop rates of 14.79% and 14.80% respectively in line with declining inflationary trend.
At the OTC market, we anticipate bargain hunting with resultant price increase amid expectation of boost in liquidity.
