Investment analysts and market experts of Cordos capital and renaissance capital have predicted a bond issuance increase in 2022.
In a new market report released by Cordos Capital, developments in the 2021 financial market was tremendous and economic recovery was rapid despite the Covid-19 pandemic in 2020.
The report revealed that yield advanced in the fixed income market, the yields advanced earlier than expected and equalized in the second part of 2021.
Words from the report “The bearish sentiments in the fixed income market were driven mainly by the twin effect of upward repricing of OMO [open market operations] bills by the CBN [Central Bank of Nigeria] to attract FPIs [foreign portfolio investors] and frontloading of government borrowings, which led to a substantial increase in the supply of domestic debt instruments.
“Consequently, the strong start to the year in the equities market was derailed by the upward retracement in fixed income yields before impressive corporate earnings lifted market performance in the Q3 2021.”
Analysts from Cordos Capital says field income yields will increase marginally in 2022 due to intertwining market factors
Cordos analysts further revealed factors responsible for the fixed income yield increase includes tighter global financing conditions as global central banks commence of normalization of monetary policy, and consternation regarding the pre-election period resulting in yield expectations.
The acting Chief Executive Officer, Nigeria, Renaissance Capital, Mr Samuel Sule, in his presentation at an online press briefing, described 2021 as a record year in terms of primary dollar issuance across Africa, particularly for Nigeria, with the sovereign, banks, and corporates having already accessed the markets thus far.
He said, “We expect to see more borrowings both in foreign and local currencies. The Nigeria sovereign will require funding for its budget deficit, and this will be sourced internally and externally from commercial and multi-lateral entities.
“We expect the Eurobond markets to remain a key part of the funding mix and investors will continue to monitor the performance of recently launched and historical issues to guide further appetite.”