Foreign Investors Ramp Up Nigeria Eurobonds, Yields Slide
The Nigerian sovereign Eurobonds yield declined in the international market amid growing interest from foreign portfolio investors in top oil-linked African issuers.
The drop in benchmark yields reflects robust global investor interest and a broadly favourable outlook toward Nigeria’s dollar-denominated sovereign obligations, analysts said.
The top oil-producing countries are noted to be key beneficiaries of the US-Iran war that triggered the global energy crisis. The Middle East war is anticipated to boost Nigeria’s fiscal performance, with Brent price topping $115 per barrel.
The Nigerian Sovereign Eurobond market began the week on a positive note, buoyed by higher oil prices amid supply worries linked to renewed tensions around the Strait of Hormuz.
Still, the broader external environment was less favourable for emerging markets, as rising U.S. Treasury yields and a resilient dollar, driven by lingering inflation concerns, kept global risk appetite in check, AIICO Capital told investors in a note.
Analysts said the curve closed broadly positive, with the front end largely stable, with NOV 2027 easing marginally by 2 basis points (2bps).
The belly of the curve outperformed, with MAR 2029, JAN 2031, FEB 2032, and SEP 2033 declining by 15bps, 9bps, 8bps, and 32bps, respectively.
At the long end, yields were mostly unchanged, although slight compression was observed in NOV 2047 and JAN 2049. Consequently, the average benchmark yield declined by 2bps to close at 6.84%
“ We expect heightened volatility in the Nigerian Eurobond market, as U.S.–Iran tensions drive risk-off sentiment, though elevated oil prices should provide some support to Nigerian assets”, AIICO Capital said.
