Yield Nears 10% as Foreign Investors Sell Down Nigeria’s Eurobonds
The average yield on Nigeria’s sovereign Eurobonds yield has expanded near 10% base in the international market as inflation-propelled riskoff sentiment triggered selloffs.
Foreign portfolio investors (FPIs) had ramped up Nigeria’s Eurobond after the US Federal Reserve’s rates cuts, and homegrown uncertainties, including widening headline inflation, reversed the trend.
The inflation rate in Nigeria accelerated faster to 33.88% in October 2024, despite massive adjustments to the benchmark interest rate. Ahead of the monetary policy committee meeting in the latter part of the month, Broadstreet is already projecting another interest rate hike.
The monetary policy tightening had reduced the negative interest yield on naira assets below 5%, but worsening consumer price index has now lifted it up to about 7%.
With foreign investors’ low appetite, Nigeria’s Eurobond price has slumped, resulting in higher yields. Traders said they witnessed sell pressure across the short, mid, and long ends of the yield curve, leading to a 24 basis points increase in the average yield to 10%.
Offers were pronounced across the curve, with the mid end taking most of the hit, particularly the Mar-29 and Feb-32 maturities, dropping by 27bps and 26bps, respectively, TrustBanc Financial Group wrote in a note.
Fixed income market analysts at AIICO Capital Limited told investors in a note that the market witnessed significant selling activity in the African bonds segment. Following Donald Trump’s election victory, analysts noted that investors continued to react to the likelihood of less aggressive rate cuts from the US Federal Reserve.
There was some selective buying in longer-term Angolan bonds, supported by a minor rise in oil prices. The Sub-Saharan African curve displayed a predominantly bearish bias save for Egypt, where mixed sentiments prevailed.
Fixed income market analysts now anticipate a modest recovery in the near term as investors may find current levels attractive. #Yield Nears 10% as Foreign Investors Sell Down Nigeria’s Eurobonds Naira Plummets to N1690/$ after CBN Priced Spot Rate High

