Renewed Selloffs Crash FGN Bond Prices

August 11, 2018
FGN Bond prices OTC Market

By Cowry Asset

In the just concluded week, FGN bonds traded at the over-the-counter (OTC) segment depreciated in value for most maturities tracked on renewed sell pressure as political risk continued to weigh on the market: the 20-year, 10 percent FGN JULY 2030 debt, the 7-year, 16.00 percent FGN JUN 2019 debt and the 5-year, 14.50 percent FGN JUL 2021 debt decreased by N0.67, N0.14 and N0.86 respectively.

Their corresponding yields increased to 14.33 percent from 14.18 percent, 12.74 percent from 12.64 percent and 14.04 percent from 13.68 percent respectively.

However, the 10-year, 16.39 percent FGN JAN 2022 debt appreciated in value by N0.06 and its corresponding yield fell to 13.74 percent from 13.77 percent.

Meanwhile, the value of the FGN Eurobonds traded on the London Stock Exchange further depreciated for all maturities tracked – the 10-year, 6.75 percent JAN 28, 2021 bond, the 10-year, 6.38 percent JUL 12, 2023 note and the 15-year, 6.50 percent NOV 28, 2027 paper lost $0.83, $1.25 and $3.06; their corresponding yields rose to 5.27 percent from 4.93 percent, 6.22 percent from 5.92 percent and 7.52 percent from 7.04 percent respectively.

Next week, the Debt Management Office (DMO) will issue bonds amounting to N90 billion viz: 12.75 percent FGN APR 2023 (5-Yr Re-opening) worth N25 billion, 13.53 percent FGN MAR 2025 (7-Yr Re-opening) worth N25 billion and 13.98 percent FGN FEB 2028 (10-Yr Re-opening) worth N40 billion respectively.

We expect the bonds to be issued at higher stop rates in order to attract foreign portfolio investors.

At the secondary market, we expect FGN bond prices to rise (with corresponding decrease in yields) at the OTC market amid expected ease in financial system liquidity.

Dipo Olowookere

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.

Mr Olowookere can be reached via [email protected]

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