Nigeria Eurobond Yields Steady ahead of External Borrowing
The average yield on Nigeria’s Eurobond remained steady as foreign investors and local banks stayed action as the authority announced plan to raise funds from the external market. Nigeria approved a $2.2 billion financing program for external borrowing, including a potential Eurobond and Sukuk bond offer.
Analysts noted that trading sentiment was mixed as investors anticipate higher borrowing costs as a result of uncertainties in the local economy. The market experienced mixed activities across the short, mid, and long ends of the yield curve, keeping the average yield steady at 9.54%, Cowry Asset Limited told investors.
Also, AIICO Capital Limited said in note that trading activities was initially calm. This was followed by a brief selloff in Nigerian sovereign papers after announcing a $1.7 billion Eurobond and $500 million Sukuk issuance.
However, the selloffs were subsided, and most African markets closed stronger. The bearish movements observed today were primarily concentrated in the long end of the yield curve, while the SSA curve exhibited a mixed performance, TrustBanc Capital Limited said in a note.
In Oct, Meristem Securities said in a report that the performance in the Nigeria Eurobonds market was mixed, titling more towards a bearish bias. Early in the month, bullish sentiments emerged as investors’ cherry-picked across the curve at attractive levels following the release of the US Consumer Price Index (CPI), which revealed annual inflation easing to 2.40%, down from 2.50% in August.
As a result, average yields gradually declined to 9.11%.
However, this bullish momentum was halted mid-month due to deteriorating macroeconomic fundamentals within the domestic economy, revealed by the National Bureau of Statistics (NBS) reporting an increase in annual inflation to 32.70% after two consecutive months of declines.
Additionally, robust US retail sales data fueled bearish sentiments, raising concerns about the US economy and expectations of a possible rate cut in November. Consequently, average yields gradually expanded to 9.58% towards the end of the month. #Nigeria Eurobond Yields Steady ahead of External Borrowing US Dollar Falls Ahead of Consumer Price Data
