FGN Bonds Update: FGN Bond Auction Holds Wednesday As Average Yield Declines to 7.6%

In line with expectations, the bonds market  traded with bullish sentiments spread across the yield curve as local investors sought to re-invest their bond coupon payments (c. N142.1bn) and OMO maturities.

Demand further persisted in spite of the release of Consumer Price Index data for the month of August which showed a rise in inflation (12th consecutive increase and highest in 29 months) to 13.2% from 12.8% in July. As a result, average yield across all tenors shed 12bps W-o-W to settle at 7.6%.

Strong buying interests were observed across the short-, mid- and long-term bonds while the mid-term bonds recorded the most bids with the APR-29, MAY-29 and NOV-28 bonds contracting by 48bps, 40bps and 38bps respectively W-o-W.

Today, the Monetary Policy Committee (“MPC”) of the Apex bank is scheduled to meet. In light with  the current inflationary pressures, we expect the Monetary Policy Rate (“MPR”) to be kept unchanged in a bid to moderate inflation and achieve price stability. Nevertheless, we do not rule out the possibility of the CBN employing its unorthodox policy measures.

Looking ahead, the Debt Management Office (“DMO”) is slated to conduct a bond PMA on Wednesday. A total of N145.0bn is being offered across four re-opening bonds. Please see more detail in the table below:

Please see more detail in the table below:

BOND 12.50% JAN 2026 12.50% MAR 2035 9.80%JUL 2045 12.50% MAR 2050
10-Yr Re-opening 15-Yr Re-opening 25-Yr Re-opening 30-Yr Re-opening
Term to Maturity 5 Years, 4 months 14 Years, 6 months 24 Years, 10 months 29 Years, 6 months
Offer Amount (bn N) 25,000,000,000 40,000,000,000 40,000,000,000 40,000,000,000
Previous Stop Rates 6.7000% 9.3500% 9.7500% 9.9000%

We expect a quiet trading session today as investors trade cautiously ahead of anticipated supplies at the bond auction. Nevertheless, market activities should pick up towards the end of the week as improved system liquidity continues to fuel demand in this space.

Please see indicative secondary market bond rates below:

Bond Tenor (Years) Yield (%) Coupon (%) Implied Price
Jan-22 2  2.10 16.39 118.87
Apr-23 3                        2.20 12.75 126.49
Mar-24 3                        2.20 14.20 140.00
Mar-25 5                        3.40 13.53 141.95
Jan-26 5                        2.20 12.50 151.55
Mar-27 6                        3.40 16.29 174.48
Feb-28 7                        5.20 13.98 153.48
Apr-29 9                        6.20 14.55 154.97
Jul-34 14                        6.20 12.15 154.67
Mar-36 15                        6.40 12.40 158.42
Apr-37 16                        8.20 16.25 172.23
Apr-49 29                        8.40 14.80 168.92

Rates are valid till 01:45pm today (21-Sep-2020)

*Please note that the minimum subscription for Bonds is N20,000,000.00

 

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