06 July 2018 ( Lagos ) : The yield curve in Nigeria’s fixed income market has normalized in recent months, taking an upward-sloping shape amid continued recovery. Analysts note that the yield curve became inverted in 2016 with short-term interest rates higher than long-term interest rates, which is often a pointer to a coming recession. Unsurprisingly, the Nigerian economy contracted 1.73% in 2016. 

As the economy transitioned through 2017, the yield curve became more humped-shape, with interest rate on the 1 -year treasury bill trending above shorter-dated treasury bills as well as government bonds. Analysts consider this trend to be long overdue and a positive sign for the market, and expect greater investor attention at the long end of the space – in contrast to recent years where investors have been overweight short-dated securities. 

Reporting for EasyKobo on Friday, 6 July 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited