Nigeria US Dollar Bond Yield Crosses 10% after Sell Pressure
The average yield on Nigeria’s US dollar bonds crossed 10%, its resistance level for long period as foreign asset managers’ risk off sentiment trigger portfolios rebalancing.
During the midweek trading session on international capital market, foreign investors sell down their asset over negative perception of Nigerian macroeconomic performance and its uncertain, economic market direction.
Inflation in Nigeria has turned red while the apex bank rates on Treasury bills remains elevated, though gradually coming down. The authority plan domestic US dollar bonds for June to reduce FX illiquidity in the market.
Details about the plan remains scanty, and some experts are of the view that government might shed the idea following $2.25 billion World Bank inflows and latest disbursement from oil-backed loan deal signed by Nigerian National Petroleum Company Limited with Africa Import-Export Bank.
In the international market, foreigner, and some local banks with interest in Nigeria’s US dollar denominated bonds had increased their exposure to the sovereign bonds.
Nigeria’s Eurobond yield had remained subdued, trending below 10% due to its global competiveness versus single digit yield on US Treasury note in the secondary market.
The sovereign Eurobonds market was predominantly bearish across maturities, thus pushing the average yield higher by 18bps to 10.19%, Cowry Asset Management Limited told investors via email.
Elsewhere, the US Treasury’s 20-year auction hit a high yield of 4.452%, down from the 4.635% high in the previous auction. The 10-year US Treasury yield falls 0.061 percentage point to 4.216% and the two-year loses 0.058 percentage point.
The 2-year US Treasury yield declined 0.058 percentage point to 4.701% today. The 30-year US Treasury yield declined 0.056 percentage point to 4.353% today.
In the local market, the fixed income market reversed its bearish trend in May 2024, buoyed by increased liquidity. The Nigerian Treasury Bills (NT-Bills) market ended the month on a bullish note, with the average yield dropping 48bps month on month to 21.72%, ARM Securities Limited said in its fixed income market update.
Similarly, the FGN bond market witnessed positive sentiment as the average yield fell by 25bps in May to 18.69%. Overall, the Naira fixed income market closed bullish, with average yields down 37bps month on month to 20.20%. Retail Price of Petrol Climbs to N769.62, Says NBS
