FGN Bond Yields Creep Up as Investors Await CBN Rate Decision
The yield on Federal Government of Nigeria (FGN) bonds increased in the secondary market as investors adopted a wait-and-see approach ahead of the Central Bank’s Monetary Policy Committee decision.
Trading remained subdued, with minimal yield fluctuations across different maturity periods. Most market participants maintained cautious positions in anticipation of the rate announcement.
Secondary market activity reflected yield increases across the curve: short-term bonds rose by 7 basis points, mid-term instruments by 2 basis points, and long-term securities by 2 basis points.
This movement led to the average FGN bond yield rising by 4 basis points to 19.06%, driven primarily by modest sell-offs in the short and middle segments of the yield curve.
The previous week was characterized by cautious trading following the government’s announcement of a ₦300 billion Sukuk issuance with a 7-year maturity and a 19.75% coupon rate.
Market sentiment improved by mid-week, however, as longer-dated instruments attracted significant investor interest. The FGN 2034, 2032, and 2049 bonds particularly stood out, recording notable yield declines.
April’s inflation data provided additional support to the market, with the Consumer Price Index (CPI) easing to 23.71% from 24.23% in March.
This positive economic indicator spurred heightened interest in the FGN 2033 bond toward the end of the week, contributing to an overall average bond yield compression.
