Nigeria’s 10-Year U.S. Dollar Bond Yield Falls 6 bps
Nigeria’s 10-year U.S. dollar bond yield fell by six (6) basis points (bps) as global portfolio investors rotated positions in the Eurobond market on Wednesday.
Bullish sentiment returned to African Eurobonds, with record buying interest in oil-linked issuers, dragging down yields for Angola, Egypt, Ghana, and Nigeria.
Investors are pricing in Nigeria’s improved macroeconomic indicators and expectations that reforms will continue to deliver the desired results, while elevated oil prices are enhancing the country’s fiscal performance.
The global debt capital market has seen a shift in bond yields as central bankers continue to hike policy rates to curb global inflation pressure. U.S. yields have seen a significant uptick, and European markets followed the same pattern.
In Africa, monetary authority positions diverged. Some central banks are pursuing contractionary policy while others are pushing for interest rate cuts.
The 10-year yield on Nigerian Eurobond fell 6bps to 7.97%, and the 7-year fell 3bps to 7.70%, AIICO Capital Limited said in its market update.
The investment noted that 3-, 5-, and 20-year Nigerian Eurobond yields were unchanged at 6.68%, 7.19%, and 8.55%, respectively. Hence, the average yield fell by 2 bps to 7.62%.
Expect yields to move sideways, with buying mostly in the 7- to 10-year part of the curve, AIICO Capital Limited said, adding that Oil above US$100 helps Nigeria’s dollar earnings and supports demand for its Eurobonds.
The 10-year Treasury note yield fell on after energy prices stabilised, as investors looked ahead to key economic data releases this week, including the latest U.S. inflation print.
The yield on the 10-year Treasury note — the main benchmark for mortgages, auto loans, and credit card debt — fell more than 2 basis points to 5.215%.
The longer-dated 30-year U.S. Treasury yield — which tends to move on geopolitical events — was down more than 3 basis points to 5.564%.
The yield on the 2-year Treasury note, which more closely follows short-term Federal Reserve rate decisions, was unchanged at 4.791%.
Oil prices have surged as attacks on shipping in the Gulf and the Strait of Hormuz increase, heightening concerns about global supply.
The market is widely expected to leave rates on hold at the October meeting, but a December rate hike remains very much on the table. #Nigeria’s 10-Year U.S. Dollar Bond Yield Falls 6 bps
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