Foreign Investors Rush African Eurobonds as U.S. Cuts Rate
The African Eurobond market closed positively to halt the past two sessions’ profit-taking as the U.S. Federal Reserve cut interest rates by 25 basis points (bps) for the third consecutive time to 3.50%-3.75%.
In a fresh search for elevated yields on US dollar-priced bonds, foreign portfolio investors flocked to the African Eurobonds space with interest in oil-linked sovereign issuers like Nigeria, Angola and Ghana, Egypt were among top pick.
The action was informed by widening yields gap with US Treasury note following Federal Reserve dovish monetary policy -which may extend in 2026.
The Fed, however signalled pause in further easing as the central banker looks for clearer signals about the direction of the job market and inflation.
Investors positioned ahead of the U.S. FOMC meeting; short-dated papers weakened, while mid-to-long bonds firmed, resulting in a mild uptick in the benchmark yield.
With the trading pattern, yields fell across most African sovereign curves, driving price gains across most maturities, according to investment firm AIICO Capital Limited.
Broadstreet fixed income market analysts saw profit taking activities at the short end of the sovereign Eurobond curve, but support came along the mid and long durations.
Fixed income market analysts said Nigerian sovereign Eurobonds with 2032 and 2047 maturities were unchanged, while the 2027 yield rose 8bps to 5.88%.
Consequently, the average Nigerian benchmark yield edged down by 1bp to 7.35% and analysts are expecting market to trade upward in the near term amidst the recent cut on borrowing cost.
U.S. Treasury yields decline after the Federal Reserve’s well-anticipated interest-rate cut on Wednesday, with focus shifting to data again.
The 10-year Treasury yield fell to around 4.12%, marking a second consecutive session of declines after the Federal Reserve delivered its third quarter-point rate cut this year, in line with expectations. #MeCure: Sustaining Momentum on Strong Fundamentals, Renewed FX Tailwinds
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