Amidst geoeconomic uncertainty and the global central banks’ monetary easing trend, offshore investors shifted their attention to African Eurobonds.
With yields declining, Nigeria’s sovereign notes courted foreign portfolio investors’ attention at the international market, along with demand in Angola and Egyptian notes.
The yield contraction demonstrated strengthening interest and positive confidence among global investors toward the nation’s dollar-denominated sovereign debt.
Oil-linked issuers still offer relatively high yields compared with advanced economies, though political and economic risks are not at par, leaving a wide difference in borrowing costs.
Investors sentiments on Nigeria’s papers have increased since economic reforms, and by extension latest credit ratings upgraded by major global agencies.
The country has also received recommendations from the multilateral lenders, referencing the economic reforms as successful, though inflation and interest rates remain elevated.
African Eurobonds traded positively, supported by a rebound in global oil prices following India’s reduction in Russian oil purchases.
Sentiment was constructive across major oil-producing issuers, including Nigeria, Angola, and Egypt. Notably, renewed buying interest in Nigerian sovereign bonds drove yield compression across several maturities, AIICO Capital Limited said in an investor’s note.
Nigeria’s Eurobonds with Jun-31, Feb-30, Sep-28 and Dec-34 expiration was their tightening by 7bps, 6bps, 5bps and 4bps to 6.57%, 6.19%, 5.61% and 7.43%, respectively on Monday.
Consequently, the average Nigerian Eurobond benchmark yield edged up by 3bps to 7.09%. Fixed income market analysts expect the eurobonds to trade mixed in the near term as the market reacts to oil price volatility and U.S. – Iran negotiation update. Moody’s Assigns A1 to PepsiCo’s New Euro Unsecured Notes
