Liquidity in Nigeria’s Fixed income market rose significantly for July 2021 as investors reengage domestic financial markets more actively.
Mr. Ebo Ayodeji, Head, Retail Investments at Chapel Hill Denham said this while analyzing the developments in the Nigerian fixed income market.
According to the market maven fixed income buying interest spun upwards in July on the back of a three-month decline in the national domestic headline inflation rate, which fell from 17.83 per cent in May to 17.75 per cent in June 2021.
The market retailer said investors were optimistic that the Central Bank of Nigeria (CBN) would hold the monetary policy rate at 11.5 per cent as it hopes that the countries output (GDP) continues to grow as the inflation drops steadily year on year. With the inflation rate sliding, nominal interest rates are expected to fall causing bond prices to rise.
Ayodeji also noted that the latest Debt Management Office (DMO) bond auction on behalf of the Federal Government showed the preference of investors for long-term bonds.
The financial analyst added, “Investors are expecting that rates may have capped at a level where we will see a decline. This is why investors are locking in early at good rates before a reversal”.
Taking a peep at the second half of the year he said the liquidity in the fixed income market would fall in August, while the bond market would be active given the government’s signing of a supplementary budget into law by the President, said Proshare.
