Nigeria Eurobond Yield Falls on Foreign Investors’ Buying Appetite

Nigeria’s US dollar bonds traded on a bullish note in the international market on an expectation of an improved economic performance.

As a result of buying momentum, the benchmark yield on Nigeria’s Eurobond cleared lower by 5 basis points, according to traders’ notes.

Latest data showed that gross domestic product climbed in the third quarter as the government stays on renewed hope plan to drive economic growth.

Though Nigeria’s inflation rate has become a pressure cooker pushing the nation’s misery index upward despite monetary policy tightening, price instability continues to worsen. Analysts projected that the economy will improve as Nigeria raised oil production output further.

In its market update to investors via email, Cowry Asset Limited said Nigeria’s sovereign Eurobonds market, buy sentiment prevailed across the short, mid, and long ends of the yield curve, causing a decline in the average yield by 5bps to 10.58%.

Treasury sold off on Monday, pushing yields higher for the second time in three sessions, as investors weighed Federal Reserve Chairman Jerome Powell’s recent efforts to damp rate-cut expectations.

Last week, US Fed Chair Jerome Powell pushed back against expectations for a 2024 rate cut and a manufacturing survey from the Institute for Supply Management showed a continued contraction in activity during November.

Reacting, the 2-year Treasury yield rose 0.091 percentage points to 4.656%. The 10-year US Treasury yield rose by 0.061 percentage point to 4.286% today. In November 2023 US 10- and 30-year Treasury yields had their steepest monthly declines since August 2019

In the bond market, trading activity was bullish, as buy interest was observed at the longer end of the yield curve, thus dragging the average yield on FGN Bonds lower by 7bps to 15.62%.  Nigeria Eurobond Slumps after CBN Resumes OMO Auction

A slew of fixed income analysts said that they expect tepid sentiments in the bond market as investors continue to hunt for opportunities across the curve.