African Eurobond Yields Fall as Oil-Linked Issuers Rebound
Recovering from seller market conditions, the African Eurobond yields dipped in the international market as oil-linked issuers experienced increased demand for their borrowing notes.
Trading activities were influenced by rising global oil prices on account of an imbalance between demand and supply outlook with persistent geopolitical tensions.
Oil-linked issuers’ bonds were broadly bullish, note, supported by improved risk appetite and a pullback in U.S. Treasury yields, which encouraged selective buying across emerging market sovereign credits.
Portfolio buyers re-entered at attractive levels across the curve. Peer sovereigns like Ghana and Angola also posted gains. In contrast, the Egypt and Kenya curves closed mixed, TrustBanc Financial Group Limited told investors in an update.
AIICO Capital noted that softer U.S. December consumer price index data, which came in at 2.6% year on year, lower than expected and the previous reading of 2.7%, spiked investors’ positive sentiment across African paper, despite lingering caution around global macro uncertainties.
Consequently, the Nigeria Eurobonds recorded broad-based gains across the curve, as yields compressed in all maturities, driving the average benchmark yield down by 14 basis points to 7.12%, a slew of investment analysts reported.
The yield contraction demonstrates strengthened and positive appetite from international investors for the country’s dollar-denominated sovereign debt.
The market expects positive sentiment to persist as investors positively react to the recent decline and in anticipation of U.S. PPI data. Global oil prices surged by about 3% as the prospect of disruptions to Iranian crude exports overshadowed possible increased supply from Venezuela.
Brent crude climbed $1.85, or 2.90%, to $65.57 per barrel, while U.S. West Texas Intermediate (WTI) rose by a significant $2.04, or 3.44%, to $61.36.
Similarly, gold hit a record high on Tuesday, as U.S. inflation data cemented bets on Federal Reserve rate cuts this year and persistent geopolitical and economic uncertainties drove safe-haven demand, while silver also hit a fresh peak. The spot gold price rose 44 bps to $4,614.29/oz, while U.S. gold futures followed, edging up 15bps to $4,621.74/oz.
Analysts expect markets to trade cautiously with risk-off sentiment, as oil prices remain pressured by supply concerns and gold stabilises after recent profit-taking, keeping investor positioning defensive ahead of key data releases. Nigerian Bonds Yield Surges over Subdued Investors’ Appetite
