Foreign Investors Sell Nigeria’s Eurobonds, Ramp Up New Issues
The Nigerian Eurobond market weakened considerably, with yields expanding 9 basis points bps to 7.92%, reflecting heightened risk aversion and capital flight in the offshore segment, investment firm Cowry Asset said in a note.
Foreign investors, however, rotated their portfolios, ramping up new issuance after significant rejection at the recently concluded external capital raise by Nigeria’s Debt Management Office.
The African Eurobond market traded mixed with a bearish tilt, as unmet demand from the oversubscribed external offer spurred investors to seek higher yields on new issues.
Nigeria sold the 10- year note priced at 8.6308%, below the initial guidance of 9.125%, while the 20- year note cleared at 9.1297%, down from 9.675% at guidance.
As such, repositioning across maturities pushed the average yield on Nigerian Eurobonds higher in the international market.
Oil-linked African Eurobond issuers faced sell pressures as investors continued to rebalance portfolios amidst uncertainties in the global commodity market. Ghana, Angola and Egypt US dollar notes were dumped, along with Nigeria, reflecting risk-off sentiment.
Nigeria has successfully returned to the international debt markets, raising US$2.3 billion through a new Eurobond issuance that attracted robust investor participation. Total bids reportedly exceeded US$13.0 billion, reflecting sustained investor confidence in Nigeria’s improving macroeconomic and fiscal outlook.
The strong demand came despite recent geopolitical headwinds, including remarks by the US President concerning Nigeria’s handling of religious-related violence. The issuance was structured in two tranches: a 10-year note worth US$1.2 billion and a 20-year note worth US$1.1 billion.
Proceeds from the sale will primarily be used to refinance Nigeria’s US$1.1 billion Eurobond maturing this month and to partly finance the 2025 fiscal deficit, which is expected to exceed initial budget projections.
Analysts at CSL Stockbrokers said the pricing on both issuances tightened during the book-building process, reflecting strong investor demand and positive investor sentiment.
Global oil prices traded mixed on Thursday as investors considered a potential supply glut, as well as weakened demand in the United States, the world’s largest oil consumer. Brent crude rose by 1cents, or 0.02%, to $63.53 per barrel, while U.S. West Texas Intermediate (WTI) fell 4cent, or 0.07%, to $59.56.
However, gold prices receded amidst weaker dollar and a resurgence of safe-haven demand on concerns over a prolonged U.S. government shutdown and uncertainty over the legality of tariffs. Spot gold dipped 0.05% to $3,980.51/oz, while U.S. gold futures shed 0.14%% to $3,987.47/oz.
Analysts expect gold to edge higher on safe-haven demand amid U.S. government shutdown concerns and a softer dollar, while oil markets may remain under pressure as weak U.S. demand and supply overhang outweigh potential support. Excess Liquidity in Financial System Hits N5trn, Rates Swing
