MPR Hike: Bonds, NTBs Peak at 14.51%, 11.12% in Secondary Market

Nume Ekeghe

Following the Monetary Policy Rate (MPR) hike trading on Nigerian Treasury Bills (NTBs) and Federal Government Bonds (FGN Bonds) at the secondary market have continued to peak with analysts expecting a sustained upward trend.

NTBs maintained its run as the average yield grew by 8 basis points (bps) to close at 11.12 per cent from 11.04 per cent compared to the previous week while FGN Bonds sustained its stance at 14.51 per cent.

Analysts from Afrinvest noted that this spike could also be attributed to buoyant liquidity in the system which stood at N508.9bn as of Thursday last week on the back of N66 billion inflow from the Federal Account Allocation Committee (FAAC) monthly allocation.

In their weekly update, they stated: “ Average yields on the 91- and 182-days maturities advanced by 32bps and 5bps respectively. Specifically, the 11-May-23 and 7-Sep-23 maturities witnessed most selloffs as their yields expanded by 263bps and 284bps respectively.”

On its forecast for the week, they added: “ This week, the Apex bank is scheduled to roll over maturing bills worth N193.03bn through the NTBs Primary Market Auction (PMA) on the 10th-Nov-2022 across the 91-, 182- and 364-Day tenors. This week, we expect to see a bullish turn as investors anticipate the PMA. We, therefore, advise investors to take advantage of the PMA, and trade on attractive maturities across the curve while also remaining alert for possible corporate offerings.”

On FGN Bond Update, they noted that they expect a sustained upward momentum as it currently trades at 14.51 per cent.

It states: “The domestic bond secondary market continued its bearish run as investors cherry-picked instruments across the curve in reaction to improved yields. As a result, average FGN Bond yield advanced 20bps W-o-W to settle at 14.51 per cent from 14.31 per cent recorded in the previous week.”

They added, “Significant selloffs were witnessed at the short and medium end of the curve, average yield advanced by 38bps and 35bps to close at 13.74 per cent and 14.78 per cent respectively. The MAR-2024 and the MAR-2025 maturities advanced the most by 105bps and 40bps W-o-W respectively. Conversely, average yield at the long end of the curve contracted by 11bps to close at 14.90 per cent with notable demands.”

On its forecast for the week, it added: “Going into the week, we expect the current trend to persist in the interim as investors continue to demand higher yields. Thus, we advised investors to trade cautiously while taking advantage of relatively attractive corporate offerings.”

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