Bond market extends decline amid bearish sentiment

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The Federal Government Bonds market extended its bearish trend into the second consecutive week as the market closed on a negative note last week.

Bonds traded on slightly bearish sentiments as investors traded cautiously due to the postponed elections and in anticipation of the bond auction, which held on Wednesday.

Consequently, the average yield across tenors inched northwards by four basis points to 15 per cent from 15.1 per cent recorded the previous week, following sustained sell pressures on the 16-Aug-19 and 20-Sep-19 maturities, which declined by 68bps and 62bps week-on-week, respectively.

At the bond auction, which held on Wednesday, the Debt Management Office offered a total of N150bn across the 5-year, 7-year and 10-year bonds (N50bn apiece).

The 12.75 per cent FGN APR 2023 bond had a subscription amount of N9.52 and allotment amount of N1.5bn.

The 13.53 per cent FGN MAR 2025 bond had a subscription amount of N28.85bn and an allotment amount of N12.25bn.

The 13.98 per cent FGN FEB 2028 bond had a subscription amount of N185.98bn and an allotment amount of N136.25bn.

The total offer had a bid-to-cover ratio of 1.6x following the oversubscription of the 10-year bond (total subscription of N196.0bn), while the short-term and medium-term offers witnessed low demands with a subscription of N9.5bn and N28.9bn, respectively.

Analysts at Afrinvest Securities Limited said going into this week, they anticipated that there would be a reversal of the bearish trend as they expected coupon payments worth N26.3bn to improve demand levels.

They said, “We advise investors to take advantage of the attractive yields on the 2020s maturities. Please note that the minimum subscription for bonds is N20m.”

Source: PUNCH.

GTI

GTI is a leading Nigerian Investment Banking group with proven expertise in Financial advisory, Securities Dealing (Fixed Income and Equities), Asset management and Deal Origination. We have strong capacity in financial service delivery.

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