Foreign Investors Trim Bets on Nigeria US Dollar Bonds
Foreign investors have continued to reduce Nigeria’s sovereign Eurobonds trading at the international capital market due to risk-off sentiment. The bearish trend has lasted for days as the country faces some macroeconomic challenges.
On Wednesday, in Nigeria’s sovereign Eurobonds market, negative sentiment prevailed across all segments of the yield curve, causing a 16 basis points increase in the average yield to 9.95%, traders said in their market updates reviewed by MarketForces Africa.
According to information shared with investors, selloffs have permeated the environment as the US Fed keeps the market guessing about rate hikes in the first half of 2024. The latest release of the January FOMC meeting minutes served as a reminder that the Fed is in no rush to cut rates.
In the US, consumer inflation has not improved to a level that could cause fed fund rates to be lower, according to the latest FOMC minutes.
Last week, the average yield declined by -10 basis points to close at 9.7% week on week as of Friday’s close in the Eurobond market, according to a market update from Coronation Research. Foreign interests continue to weigh development in the local economy in line with their risk appetite.
Key macroeconomic indicators have worsened the country’s risk profile as authorities map out strategies for reforms. The local inflation rate printed higher to 29.90% and analysts are projecting a further surge in the consumer price index due to the latest FX rate pricing methodology in the country. The Naira has suffered significant value loss since its official devaluation booked in June 2023.
Africa’s largest economic growth rate is expected to slow due to dislocation in productivity activities, spooked by untamed price instability, foreign exchange crisis and weak food security.
In the secondary market for FGN Bonds, trading activity pointed towards bearish sentiment midweek, with the average yield increasing by 30 basis points to close at 16.39%.#Foreign Investors Trim Bets on Nigeria US Bonds Nigeria to Complete 1999 Constitution Amendment in 2 Years
