Nigeria US Dollar Bond Yield Rise over Selloffs
The average yield on Nigeria’s US dollar denominated bond in the international debt capital market rose midweek as market jitters triggered selloffs ahead of the presidential election tribunal’s final ruling
Due to uncertainties in the economy, foreign investors have been offloading Nigeria’s assets, pushing the market price of the Eurobond lower just as the yield curve continues to shift upward –signalling higher interest costs.
Financial experts told MarketForces Africa that Fitch Ratings’ recent report on the Central Bank of Nigeria’s (CBN) transparency issues about the nation’s true external reserves position would drive interest rate costs should there be a need for the country to make eurobond calls.
Fitch said in the report that Nigeria’s weaker external reserves highlight external risk and policy challenges for the country.
The rating agency added that while the CBN audited report improve transparency, the report noted that there are still gaps saying it is difficult to determine Nigeria’s external reserves level. Fitch Flags Nigeria’s FX Reserves for Transparency Issue
At the eurobond market, trading activities on Nigeria’s US dollar bond were dominated by fear, pushing funding costs higher while fixed securities investors watched over election related cases as a gauge for adjusting their portfolio strategies.
Nigeria President Bola Tinubu’s election win was officially affirmed by the election tribunal, a move that removed the activation of another pressure on economic activities amidst struggling private sector activities.
In the local bond market, FGN bond values remained stable for most maturities, with the average secondary market yield closing flat at 13.69%, according to Cowry Asset Management Limited.
Asset managers said notably, the 10-year, 20-year, and 30-year debts held steady at 14.33%, 14.97%, and 15.35%, respectively over lull activities in the market.
FGN Eurobonds remained bearish for most maturities tracked, with the average secondary market yield closing higher at 11.25%. Despite a broken economic position, analysts believe that reforms would drive buying momentum across the market as Nigeria keeps an eye on reform.
The 10-year US treasury yield rose 0.022 percentage points to 4.289%.
The price fell as the yield jumped up for three consecutive trading days Treasury yields jumped to among the highest levels of this year on Wednesday after data showed the U.S. economy’s services sector continued to expand in August. #Nigeria US Dollar Bond Yield Rise over Selloffs
