Bears reign at fixed income market

Nigeria’s fixed income market was bearish yesterday, with notable sell-off across the market, dealers noted.

Research analysts linked the bear reign at the fixed income market to protracted weakness in crude oil price and early reaction to election risk which heightened foreign
portfolio outflows; as foreign fund managers reduce exposure to Nigerian Sovereign Notes.

Traders said locals joined foreign investor in the sell-off, thus dampening prices of Nigerian Sovereign Notes.

“The bond market was underwater, as yields rose an average of 15 basis points (bps),with notable pressure on the short and mid segment of the yield curve. Amid the selloff, there was modest demand for the 20-year Note, thus moderating the price weakness; the Note rose barely 4bps in yield term, to close at 12.40 percent,” according
to market watchers at Associated Discount House Limited.

The 13.05 percent FGN Aug 2016 and 14.20 were pressured; losing 21bps and 11bps to close at N101.85/11.91 percent and N109.50/12.46 percent respectively. Mild demand for the 12.1493 percent FGN Jul 2034 kept the price stable, losing barely 15kobo/4bps to close at N98.15/12.40 percent.

Analysts at Associated Discount House Limited said they are looking forward to an extended pressure on bonds today, though they believe the sell-off will be moderated, “as bargain hunters (betting on lower yield next year) take advantage of this new-low prices to build positions in long duration assets.”

Source : BusinessDay

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