Nigeria’s Eurobond Yield Slumps Below 10%
The average yield on Nigeria’s sovereign Eurobonds declined below 10% due to recent buying moment in the international market. Foreign investors’ appetite for the US dollar bonds following disinflation position and expectation that the consumer price index would continue to slide.
The market is weighing the debt office decision to switch Eurobonds plan for the year for $500 million domestic US dollar bond targeted at retail investors in particular. The signal that the Nigerian economy would continue to grow on the back of the ongoing reform spurred buying interest in the Eurobond market.
The economy grew by 3.19% in the second quarter despite pressures from various sector. Oil industry drove the momentum while the Agriculture sector has also rebounded when compared with contribution to growth in the first quarter when GDP rose by 2.98%.
In the first half of 2024, average yield in the sovereign Eurobond market increased by +57bps to close at 10.2%, Coronation Research said in its mid-year report published in August, 2024.
Given the slowdown in inflation seen in advanced economies, some central banks have begun to lower their policy rates. However, global financial condition is expected to remain tight in near term as risk to inflation remains high.
“We expect the FGN to consider a Eurobond issuance once global interest rates start declining and the domestic macroeconomic environment improves”, Coronation Research said in the report.
In the Nigerian sovereign Eurobonds market yesterday, positive sentiment across segments of the yield curve led to a decrease in the average yield by 0.12% to 9.95%, according to Cowry Asset Management Limited.
Investment banking experts told MarketForces Africa that the US Fed Reserves potential rate cut in September would boost inflows into African Eurobond market as funds would start searching for value.
Bond yields were little changed early Wednesday as investors eyed US jobs and inflation data.
The yield on the 2-year Treasury rose by 0.4 basis points to 3.867%. Yields move in the opposite direction to prices. The yield on the 10-year Treasury fell 0.8 basis points to 3.823%.The yield on the 30-year Treasury dipped by 0.8 basis points to 4.114%. #Nigeria’s Eurobond Yield Slumps Below 10%
