African Eurobond Bearish Amidst Elevated U.S Treasury Yields
African Eurobonds traded on a mildly bearish note amidst elevated U.S. Treasury yields as investors reassessed Fed easing timing. Debt market analysts reported that profit-taking was evident across maturities as investors locked in gains amidst shifting global economic direction.
Investors were mostly cautious as the market weighed potential trade disruption as the U.S. renewed its tariff threat against the European Union and the United Kingdom.
To retaliate against U.S. pressure and tariffs, European officials plan to impose their own tariffs, a combative move that will lead to ‘sell America.’
There were signals the affected block are already retaliating by dumping some of their holdings of U.S. government debt—forcing the Treasury to pay more interest to lure investors back.
Oil-linked issuers faced significant sell pressure as foreign investors continued to seek safe haven assets, resulting from dollar sell-offs. Angola, Egypt, and Ghana papers experience the same pressure that triggered price decline in Nigeria’s note.
Notably, selling pressure was evident across the Nigerian curve, with yields edging higher on most maturities. The Nov-2027 Eurobond yield rose by 7 bps to 5.70%, while mid-curve papers such as the Mar-2029 and Jan-2031 widened by 4 bps and 6 bps to 6.21% and 6.72%, respectively, AIICO Capital Limited said in its investors note.
At the long end, yields also inched higher, with the Sep-2051 Eurobond closing up 4 bps at 8.54%.
Consequently, the Nigeria Eurobonds recorded a mild loss, as average Nigeria benchmark yields rose by 5bps to 7.27%, reflecting subdued international investor demand, particularly for longer-dated foreign-currency debt instruments.
The market expects cautious sentiment to persist as investors monitor global risk dynamics and external market developments. Analysts said near-term direction will hinge on upcoming macroeconomic data and shifts in global risk sentiment.
U.S. Treasury yields jumped Tuesday as investors weighed renewed tariff threats from Washington that revived fears of a trade war with Europe and spurred a flight from U.S. assets.
The 10-year U.S. Treasury yield climbed to its highest level in months as renewed trade tensions and policy uncertainty rattled global bond markets.
The yield on the benchmark 10-year Treasury was last seen trading more than 6 basis points higher at 4.295%. Yields on longer-dated 20- and 30-year Treasury spiked, adding around 8 basis points to trade at 4.878% and 4.92%, respectively. One basis point is equal to 0.01%, and yields and prices move in opposite directions. CBN Sells N2.6tn OMO Bill to Investors at 19.39% for 245-Day
