NTBs, FGN Bond Trading Surge 90%, 83% as Fixed-income Turnover Hits N8.9tn

Last week, the fixed-income market in Nigeria experienced a surge in trading activity, with Treasury Bills and federal government bonds seeing a remarkable rise of 90.3% and 83.1% respectively. This led to a total market turnover of over N8.9 trillion, up around 10% from the previous week's N8.07 trillion. The number of trades jumped to 2,812 from 2,097, marking a 34.1% increase week-on-week, and the number of participants rose to 28 from 27.

Among the major instruments, Treasury Bills saw the most substantial growth, with a traded value of N1.67 trillion, a 90.3% increase from N877.76 billion. FGN bonds also recorded a significant jump, with turnover rising 83.1% to N2.18 trillion from about N1.19 trillion in the previous week. The combined trading in Treasury Bills and FGN bonds reached about N3.85 trillion, up approximately 86% compared to the previous week.

The increase in activity followed the Monetary Policy Committee's announcement of a rate cut. Analysts at Cordros securities predict a sustained bullish bias in the Treasury bills secondary market, driven by ample liquidity and the recent rate cut. They foresee resilient local demand, improving offshore participation, and the recent rate cut to support the bullish trend in the short term.

In the medium term, however, sizeable government borrowing requirements are expected to keep yields relatively elevated, with the longer-term yield trajectory contingent on monetary policy conditions, foreign inflows, domestic liquidity, and the FGN's funding needs.