Risk-Off Sentiment: Nigeria’s US Dollar Bonds Yield Rises to 7.7%
Foreign portfolio investors (FPIs) trimmed their Nigeria US dollar bond holdings at the international market on Thursday as risk-off sentiment greeted the US government reopening.
Investors started to weigh their position as markets anticipate US authority will begin to release pending economic data in post-shutdown actions.
Nigerian Eurobonds softened, with yields expanding 8bps to 7.71%, investment firm Cowry Asset Limited told investors in its market update.
Market analysts said this upward movement signals heightened risk-off sentiment and potential capital repatriation, as investors recalibrate their exposures and re-evaluate Nigeria’s sovereign risk profile amid ongoing macroeconomic uncertainties.
Issuers in African Eurobond market experienced mixed to bearish bias on their long duration notes amidst investors’ cautious reaction after the US President Donald Trump signed funding bill that brought an end to the Govt shutdown.
There was heightened profit-taking in the Nigeria issuance (2036 and 2046) which spanned across other maturities. Consequently, the average yield on Nigerian Eurobonds rose by 42bps.
“We expect reversed market sentiment as investors digest the impact of the funding bill and the release of economic data”, AIICO Capital Limited told investors in a note.
In the local bond market, demand for naira assets continues to drag benchmark yield downward ahead of inflation and November auction.
The FGN bond market closed Thursday on a bullish note, with average yields compressing 5 bps to 15.57%, reflecting continued investor demand for domestic sovereign instruments as market participants pursue compelling yield opportunities in the local fixed-income market.
Investment analysts said buying interest focused on the short- to mid-tenor segment. The short end saw notable repricing, as the dual 2027s and 2028s bonds declined by 9 bps and 26 bps to close at 15.65% and 15.61%, respectively.
Meanwhile at the mid segment, the 2032 bond dropped 38bps to settle at 15.17%. Overall, the average benchmark yield fell and analysts expect similar sentiment from investors in the near term. First Holdco Dips Below N1.3trn Amidst Huge Trading Volume
