Nigeria Eurobonds Yield Tracks Below 8% on Bargain Hunting
Foreign portfolio investors (FPIs) ramped up Nigeria’s sovereign U.S. dollar-denominated bonds at the international market amidst Federal Reserve rates cut expectations.
Last week, the Nigerian sovereign Eurobond segment closed the week on a positive note, buoyed by strong investor sentiment across the curve.
The Nigeria US dollar priced bonds offer approximately eight percent return per annum on investment ahead of inflation data release on Monday. The amount is twice the yield on 10-year U.S Treasury note, similar to other African issuers Eurobonds papers.
Investment banking firm Cowry Asset Limited told investor demand was particularly evident in mid- to long-dated maturities. This reflected investors’ interest in long duration asset amidst weak U.S economic data with declining yield on U.S Treasury note.
The market trend encouraged foreign portfolio investors sought higher yields in emerging-market assets against a backdrop of improving risk appetite. This broad-based buying interest pushed average Eurobond yields lower by 15 basis points week-on-week, settling at 7.86%.
African Eurobonds traded mixed through the week but closed stronger as markets focused on the upcoming Fed decision. AIICO Capital Limited said in a note.
Early gains were driven by weaker U.S. payroll data and growing confidence in a September rate cut, with probabilities fully pricing a 25bps reduction and a slim chance of 50bps.
Sentiment wavered midweek after sharp downward revisions in U.S. job growth, though softer wholesale inflation and cooling PPI reinforced easing expectations.
By Thursday, U.S consumer price index data showed headline inflation rising to 2.9% year on year, alongside higher jobless claims, deepening conviction the Fed will act. Investors also tracked geopolitical risks, including Trump’s tariff push and rising Russia tensions.
At week’s end, Eurobonds consolidated, with Nigerian papers finishing firmer as average mid-yield dipped near 7.9% with mixed expectations over Fed rate cuts in the new week.
Investors are confident that inflation remains subdued enough for the Fed to cut rates—with further easing expected this year. Markets price in over a 90% chance of a 25-bps cut at the September meeting and roughly a 75% probability of three total rate reductions by year-end. #Nigeria Eurobonds Yield Tracks Below 8% on Bargain Hunting
