Foreign Investors Flock Nigeria’s Eurobonds as US Rates Cut
Foreign portfolio investors in the international markets increase bets on Nigeria’s sovereign Eurobonds as traders sentiment improved. Markets, portfolio investors’ sentiment were shaped by the outcome of the U.S. election and Federal Reserve’s recent decision to cut rates by 0.25% to a range of 4.50%-4.75%.
Elevated yield on Nigeria’s US dollar bonds have been pointed out to be attracting hot monies. This reflects on increase demand for the foreign debt papers across tenors.
The market confidence has been noted to improved due to reforms, and investors’ confidence on funds repatriation – the market is still waiting for MSCI Index to restore Nigeria’s grade in the frontier market.
Analysts said there was buy pressure across the short, mid, and long ends of the yield curve, which caused the average yield to decrease by 24 basis points, settling at 9.31% on Friday.
A slew of market analysts confirmed that the Eurobonds market experienced volatility with pockets of transacted conducted African sovereign US dollar assets following the U.S. elections,
Trading direction was also influenced by a 25 basis points rate cut at the Federal Open Market Committee (FOMC) meeting, drove a strong bullish bias, AIICO Capital Limited revealed in a note.
Nigerian and Angolan papers, along with other African bonds like Egypt’s, saw gains of up to $2, analysts said. Towards the end of the week, some profit-taking occurred after a period of sustained buying interest.
Consequently, the average mid-yield for Nigerian bonds fell by 45 to 9.3% week-on-week. Analysts at AIICO Capital Limited said in a note that they anticipate that mixed sentiments will continue, with increased profit-taking likely at the beginning of the week.
Market reports showed that Nigerian curve saw buying interest across the curve, with significant focus at the belly of the curve. The election outcome has led analysts to anticipate a more measured pace for future rate cuts under the new administration, TrustBanc Capital Limited told investors in a note over the weekend. Ghana to Import Petroleum from Dangote Refinery – Official
