Fixed Income Market Records Flattish Yield as Naira Falls
The fixed income market was cold and quiet as trading activities ended with flattish yield curve midweek amidst relatively unimpressive returns in the segment. In the foreign exchange market for investors and exporters, the Nigerian local currency falls.
A similar trend was spotted in the parallel market where traders see a surge in demand for the United States dollar, thus pushing rates higher, though the Central Bank maintains an interventionist stance at the official FX market.
Money market rates slide further on Wednesday due to relatively healthy liquidity in the financial system leading to a slowdown in the average interbank rate.
The overnight lending rate component decreased by 100 basis points to close at 1.25 per cent as against the last close of 2.25 per cent. Also, the Open Repo rate also decreased by 1.00 per cent to close at 1.00 per cent compared to 2.00 per cent on the previous day.
At investors and exporters FX window, Naira depreciated by 0.12 per cent as the dollar was quoted at ₦416.25 against the last close of ₦415.75. Analysts said most of the market participants maintained bids between ₦408.00 and ₦444.00 per dollar.
Elsewhere, the Nigerian Treasury Bills secondary market closed on a flat note with the average yield across the curve remaining unchanged at 4.48 per cent.
Fixed income traders at FSDH Capital said average yields across short-term, medium-term, and long-term maturities remained unchanged at 3.68 per cent, 4.05 per cent, and 5.40 per cent, respectively.
In the OMO bills market, the average yield across the curve closed flat at 5.68 per cent, according to analysts’ notes. Average yields across short-term and long-term maturities remained unchanged at 5.42 per cent and 5.81 per cent, respectively.
In the local debt capital market, Federal Government (FGN) bonds secondary market closed on a flat note today, as the average bond yield across the curve closed flat at 11.52 per cent. Read: Analysts Expect Flattish Rate on FG Bonds as DMO Plans Auction
Average yield across the short tenor of the curve expanded by 4 basis points, while the average yields across medium tenor and long tenor of the curve declined by 1 basis point and 3 basis points, respectively.
The 26-APR-2029 maturity bond was the best performer with a decrease in the yield of 14 basis points, while the 22-JAN-2026 maturity bond was the worst performer with an increase in the yield of 24 basis points.
Furthermore, the secondary bond market may witness an uptick in trading activities in the short term due to improved system liquidity. #Fixed Income Market Records Flattish Yield as Naira Falls
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