The Nigerian bond yield is expected to rise across board this week as Pension Fund Administrators (PFAs) and institutional investors reposition their portfolios for the new month, analysts at Afrinvest Securities have said.
Last week, activities in the bonds market was mixed as average yields across benchmark bonds opened the week at 12.4 percent (from 12.6 percent on last Friday), with increased buying activity observed on the 20-year benchmark bond (FGN MAR 2036). Average yield rose by 0.2 percent to settle at 12.6 percent by Midweek amid selling activities across board. Whilst the bonds market was generally quiet on Thursday, average yield across benchmark bonds rose 1bp, eventually settling at 12.7 percent on Friday up 0.1 percent Week-on-Week.
At the foreign exchange market, observers expect the relative calm in the forex market to continue in the month of May.
During the week that has just ended, the naira traded at the CBN and Interbank market at N197.00/US$1.00 and N199.10/US$1.00 respectively. At the Bureau-De-change segment of the market, naira traded at N320.00/US$1.00 all week whilst naira traded at N322.00/US$1.00 all week at the parallel market save for Wednesday and Thursday when it firmed up to N321.00/US$1.00.
Amidst devaluation uncertainties and shortages of FX, most foreign investors remain cautious about entering the Nigerian market whilst currency and reinvestment risks linger. The figures on the NSE’s Domestic & Foreign Portfolio report released in March showed that FPI outflows (N58.2bn) in January and February surpassed inflows (N27.95bn) by 108.2%. The reservations foreign investors hold at the moment is likely to persist until there is a clear market friendly shift in FX policy direction by the monetary regulatory authority, Ayodeji Ebo, head, investment research, Afrinvest said.
However, the foreign exchange market was relatively stable at all segments throughout April.
At the money market, inter-bank rates are expected to rise as the CBN is expected to mop up excess liquidity in the system.
There is a net T-bills maturity of N150.6bn expected to hit the system on Thursday, the impact of this on liquidity levels is however expected to be off-set by a rollover of the same net amount.
Hope Moses-Ashike
