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UPDATE 1-Nigeria's five-year bond yield sheds 200 bps after surprise rate cut -traders

Published 29/05/2020, 15:38
© Reuters.

(Adds details, background)
ABUJA, May 29 (Reuters) - Nigeria's five-year bond yield
dropped more than 200 basis points on Friday as yields fell
across maturities, a day after the central bank unexpectedly cut
its benchmark lending rate to stimulate growth in Africa's
largest economy, traders said.
The bank lowered its benchmark interest rate to 12.5% from
13.5%, on Thursday, triggering bond yields to fall.
The yield on the most liquid 5-year paper fell 201 basis
points to 6.5% while the 2026 paper, a seven year bond, with six
years to maturity, fell 120 basis points to yield 8.8% following
the rate cut.
Traders said the rate cut spurred buying interest from
domestic funds battling with excess liquidity on the money
market which worsened after foreign investors dumped local
treasuries due to a plunge in oil prices that was exacerbated by
the coronavirus pandemic.
The central bank's governor on Thursday said Nigeria's
economy, which grew 1.87% in the first quarter, could contract
in the second and third quarters but recover in the fourth with
the fiscal and monetary policy measures put in place by the
authorities.

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