Foreign Investors Ramp Up Nigeria US Dollar Bonds
The average yield on Nigeria’s US dollar bonds declined as foreign investors ramped up interest in the sovereign interest amidst global yield repricing – reversing risk-off sentiment experienced earlier in the week.
Nigeria’s government is putting up growth-propelling reforms to reflate economic performance.
While macroeconomic indicators have plunged, analysts have expressed optimism about the growth outlook, except for FX market concerns. The devaluation of Nigeria’s naira has worsened inflation conditions.
A similar experience has pervaded the bond market in other clime as investors continue to adjust portfolios in line with market dictates.
Even with a slump in US inflation, the US Treasury yield has come under pressure after the Fed paused on hiking rates.
The 2-year US Treasury yield declined 0.074 percentage points to 4.840%. The price rose 4/32 to 100 9/32. However, the yield is down three of the past four trading days.
The 30-year yield declined 0.069 percentage points to 4.622% today. Yield is down two of the past three trading days
In Nigeria’s sovereign Eurobonds market, there was a positive level of activity with buy sentiment evident across the short, mid, and long ends of the yield curve, Cowry Asset Limited said in an update.
This led to a decline in the average yield by a basis point movement to 11.12%. In the local bond market, trading activities remained muted with several benchmark papers closing flat.
Nonetheless, CardinalStone fixed income securities analysts said they saw pockets of cherry-picking across some short-term tenors amidst Nigeria’s accelerating inflation rate.
Overall, the average yield closed unchanged at 15.79%. Meanwhile, an unexpected increase in jobless claims in the US reinforces the idea that interest rates are high enough to cool down inflation.
Data tracked by MarketForces Africa showed that the 10-year US treasury note loss is 0.091 percentage points to 4.444% and the two-year fall 0.074 pp to 4.840%. Naira Devaluation Deepens Economic Crisis in Nigeria