FPIs Sell Nigerian Eurobonds in Flight to Safety Drive
The average yield on Nigeria sovereign Eurobonds papers climbed to 9.8% as foreign portfolio investors (FPIs) reduced their interest in international borrowing notes amidst fresh drive into safe haven assets.
In the broader investment ecosystem, investors are looking where their portfolio returns can be optimise amidst expectation that the protectionist stance in U.S will trigger global inflation.
Some global ratings agency, and investment firm have predicted that the world’s economic growth will slow down in 2025 as U.S President Donald Trump initiated a global trade war.
On Wednesday, the African Eurobonds market heated up with sell pressures amidst strong flight to safety, with Gold market receiving attention from offshore investors seeking alpha.
MarketForces Africa reported that offshore investors trimmed positions in equities market. A similar event occurred in the Eurobond market as U.S trader war forced investors to optimise portfolios.
Despite two times disinflation in 2025, bearish sentiments dominated Nigeria’s sovereign Eurobonds market across short-, mid-, and long-term maturities.
On Wednesday, yield climbed as investor trimmed Mar-2029, Feb-2030, and Jan-2031 Eurobonds. As a result, the average yield rose by 0.20% to close at 9.84%. Traders reported that the Mar-29 and Jan-31 maturities recorded the most significant increase in yield, rising by 27bps and 23bps, respectively.
Similar bearish sentiment was observed across the curve in Egypt, Angola, and South Africa. Fixed income market analysts expect the negative sentiment to persist unless there is a favourable development on the international or local front.
Last month was characterized by a general sell-off across emerging and frontier market issuers, Erad Partners Limited said in monthly review. The firm said this downturn was largely triggered by heightened concerns regarding potential economic trade war and the imposition of tariffs, which precipitated an increase in flight-to-safety flows.
This risk-off sentiment was reflected in the surge in safe haven assets, with gold prices breaking the $3,000 mark, settling at $3118 as of 31 march. The Nigerian Eurobond maturities was not immune to this broader trend, experiencing downward price pressure in line with its peer group.
The Nigerian fixed income market in March presented a mixed picture. While the disinflationary trend remains encouraging, supply and liquidity challenges led to yield curve adjustments.
April is expected to bring consolidation, with careful monitoring of domestic fundamentals and global risk sentiment being crucial for market participants. #FPIs Sell Nigerian Eurobonds in Flight to Safety Drive Yield Slides on Post Auction Demand for Nigerian Treasury Bills
