Blended public sale outcomes weigh on fixed-income markets

The Nigerian fixed-income market skilled a difficult week, characterised by persistent bearish sentiment and cautious investor exercise throughout each major and secondary market segments. Market members continued to navigate a posh surroundings outlined by home liquidity fluctuations and exterior world pressures.

Reflecting on the present market stance, analysts at Meristem Securities famous that “traders stay cautious as they recalibrate portfolios in response to persistent inflationary considerations and shifts in yield expectations, which proceed to drive selective sell-offs in each the bond and T-bill segments”.

The Central Bank of Nigeria performed an Open Market Operation public sale throughout the week, providing a complete of N600 bn throughout 8-day, 99-day, and 113-day maturities. The public sale noticed reasonable demand, with complete subscriptions rising by 7.75 per cent from the earlier session to N767 bn.

Nevertheless, the full allotment was considerably decrease at N81bn, leading to a bid-to-cover ratio of 0.14x and a subscription-to-offer ratio of 1.28x. Cease charges cleared at 19.35 per cent and 19.69 per cent for the 99-day and 113-day maturities, respectively, whereas the 8-day instrument recorded no gross sales.

Within the Treasury Payments major market, the CBN supplied N850 bn, in comparison with the N1.05 tn supplied within the earlier public sale. Regardless of the decrease providing, investor demand remained concentrated on the lengthy finish of the curve. The 364-day invoice attracted N2.57 tn in subscriptions, accounting for 92.44 per cent of complete bids.

Complete allotment for the public sale stood at N933.92bn, with the subscription-to-offer ratio rising to three.27x from 2.23x. Whereas cease charges for the 91-day and 182-day payments held regular at 15.95 per cent and 16.65 per cent, the 364-day charge eased barely by one foundation level to 16.72 per cent.

Secondary market exercise remained largely unfavourable, as traders offloaded older holdings to place themselves within the just lately issued, higher-yielding securities. This rotation exerted upward stress on yields, significantly on devices such because the 17-Dec-26 and 4-Feb-27 payments, which noticed sharp yield will increase. Regardless of pockets of shopping for curiosity within the mid-curve, the common T-Invoice yield rose by 20 foundation factors to 17.66 per cent.

The FGN bond market equally prolonged its bearish pattern, with the common yield rising one foundation level to fifteen.76 per cent. Promote-off stress was most pronounced on the quick and lengthy ends of the curve, notably impacting the APR-29 and JUN-53 bonds. Conversely, some shopping for curiosity emerged within the mid-curve, offering a partial buffer towards broader market losses.

On the worldwide entrance, Nigeria’s Eurobond market closed within the purple, with the common yield growing by eight foundation factors to 7.25 per cent. Market analysts attributed this pattern to higher-than-expected US inflation information and a strengthening US greenback, which stimulated “risk-off” sentiments globally. This surroundings triggered widespread sell-offs throughout the Eurobond curve, with important yield will increase famous on the SEP-28 and NOV-27 papers.