FGN Bond Prices Fall on Bearish Investor Sentiment

October 27, 2018
FGN Bond prices OTC Market

By Cowry Asset

In the just concluded week, Debt Management Office (DMO) issued bonds worth N110billion, viz: 12.75% FGN APR 2023 (5-Yr Reopening) worth N35 billion, 13.53% FGN MAR 2025 (7-Yr Re-opening) worth N35 billion and 13.98% FGN FEB 2028 (10-Yr Re-opening) worth N40 billion respectively.

The 5-year and 7-year bonds were auctioned at relatively flat stop rates of 15% and 15.15% respectively.

However, the 10-year bond was auctioned at higher stop rate of 15.32% (from 15.25%) even as it was 127% oversubscribed.

Amid higher primary market stop rates, the value of FGN bonds traded at the over-the-counter (OTC) segment fell for all maturities tracked amid sustained bearish investor sentiment: the 20-year, 10% FGN JULY 2030 debt, 10-year, 16.39% FGN JAN 2022 debt, 7-year, 16.00% FGN JUN 2019 debt and the 5-year, 14.50% FGN JUL 2021 debt lost N0.19, N0.01, N0.10 and N0.12 respectively; their corresponding yields rose to 15.23% (from 15.19%), 14.71% (from 14.71%), 14.38 (from 14.28%) and 15.22% (from 15.16%) respectively.

Meanwhile, the value of the FGN Eurobonds traded on the LSE tanked for all maturities tracked – the 10-year, 6.75% JAN 28, 2021 bond, the 10-year, 6.38% JUL 12, 2023 note and the 15-year, 6.50% NOV 28, 2027 paper fell USD0.20, USD0.56 and USD1.16 respectively; their corresponding yields rose to 5.18% (from 5.10%), 6.41% (from 6.27%) and 7.67% (from 7.48%) respectively.

In the new week, against the backdrop of increased financial system liquidity, we expect higher bond prices at the OTC bonds market amid bargain hunting opportunities.

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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