Foreign Investors Stake Bets on Nigerian US Dollar Bonds
Foreign portfolio investors, or FPIs, increased their bets on Nigerian U.S. dollar bonds in the international market amidst elevated yields and hope that high oil price inflation would start to recede.
Buy pressure across Nigeria’s sovereign Eurobond’s short, mid, and long ends of the yield curve led to an 11-bps decrease in the average yield to 9.38%. Due to inflation rate acceleration, there was sell pressure that nudged the average yield around 10% in the latter part of 2024.
But trade patterns appeared to have reversed from predominantly bearish run to bargain hunting, led by offshore investors seeking to park funds in high-return assets.
On Monday, the Eurobond market maintained its positive trajectory, characterised by increased buying interest in African sovereign bonds.
The market noted particular interest in oil-exporting nations such as Nigeria and Angola, as well as within the North African curve.
However, towards the end of the session, some profit-taking was observed across these curves as market participants positioned themselves in anticipation of significant data releases scheduled for this week.
Overall, the average mid-yield for Nigerian bonds decreased on the day as demand outpaced sell orders. Traders said buying interest remained prevalent across the curve as portfolio investors leveraged on attractive yields in the market.
Most of the buy orders were skewed towards the near (Mar-29) and mid (Jan-31) dated maturities, leading to the decrease of 10 bps in average benchmark yield, TrustBanc Financial Group said in a note.
The investment firm expects reduced trading activity in the Nigerian Eurobond space as the market prepares for a combined $119 billion of US government debt issuance this week. #Foreign Investors Stake Bets on Nigerian US Dollar Bonds CBN Defends Naira, Sells Dollars to Banks 4 Times
