The Federal Government bonds are expected to witness increased buying by local pension funds, which could lead to a drop in yields by around 20 basis points.

According to traders, yields rose across maturities last week on a sell-off by some offshore investors on concerns about new foreign exchange restrictions by the Central Bank of Nigeria aimed at conserving the nation’s dwindling foreign exchange reserves.

Traders said the new measures had spurred a sell-off by some offshore investors on concerns they could hinder capital repatriation.

The rules curb access to forex to fund purchase of foreign shares and bonds, among others.

“We expect to see a moderate fall in yields across all tenor this week due to increased liquidity from budget allocation and remittance to pension funds by the government,” one dealer said.

The yield on the benchmark debt maturing in 2024 rose to 14.28 per cent on Friday from 13.82 per cent the previous week.

The 2022 paper yield climbed to 14.48 per cent from 13.93 per cent, while the 2016 debt advanced to 14.39 per cent against 13.83 per cent the previous week.

In the same vein, yields on Kenyan Treasury bills are expected to rise at this week’s sale to match shorter term rates.

Traders fear that pressure from rising overnight lending rates and shorter dated central bank repurchase agreements and term auction deposits could push Treasury bill yields higher.

By Dike Onwuamaeze


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