January 2021 FGN Bond data oversubscription of N88.3 billion |

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Meristem Securities has asserted that rates of interest will stay low till, no less than, the top of H1 2021.

This assertion was made on the just lately held webinar on Global Economy and Outlook, which the corporate themed: Bracing for a Different Future.

Although the corporate acknowledged that there’s mounting stress for upward motion in yields from a number of stakeholders, it seems the corporate concurs nothing concrete is in sight.

This line of reasoning appears to have influenced their resolution to advise traders to maneuver away from Treasury devices.

What they’re saying

Meristem advises that:

  • “Buy and hold strategy investors seeking to generate above average returns should move away from risk free Treasury instruments and focus on investment grade commercial papers and bonds which satisfy investment objectives.”
  • “Active traders with higher risk appetite are advised to focus on high-yield short duration instruments, which would be re-invested into a higher yield environment should rate reversals occur.”

The recommendation concerning shunning Treasury devices seems to be so as, contemplating that treasury invoice charge has been declining, with the newest determine — November 2020 — 0.03% as per the CBN month-to-month rate of interest information.

Further checks from the Debt Management Office web site, signifies that the newest figures for Eurobonds and Diaspora bond fall in need of the fastened yield at concern for all of the completely different classes of bonds in concern.

What you need to know

Latest figures from the CBN’s month-to-month rate of interest point out that:

  • Treasury invoice charge has been on a gradual decline for six months, right down to 0.03% because the final rise (2.47%) in May 2020.
  • Fixed deposit charges (one, three, six and twelve months) have additionally been declining – the newest figures for these point out that in November 2020, one-month deposit charge was 1.92%, 2.9% for 3 months, 2.84% for six months, and 4.89% for 12 months.
  • Compared with the corresponding interval in 2019, the figures point out that these charges fell by 75%, 66%, 71% and 49% respectively.

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