Nigeria US Dollar Bonds Attract Foreign Investors – MarketForces Africa

The average yield on Nigeria’s US dollar-denominated bonds attracted buyers in the international debt market amidst a sustained decline in the naira’s strength.

In the foreign exchange market, the Nigerian local currency has lost a large pint of blood due to heavy demand for foreign currencies –especially the US dollar which appears to be the dominant foreign currency in Africa.

While the government continues to push forth economic plans and policies to drive momentum, the intrinsic decay in the system over the years has remained downside toward the realisation of economic prosperity of Africa’s largest nation by the size of gross domestic product (GDP). Nigeria Eurobond Slumps after CBN Resumes OMO Auction

Nigeria’s inflation rate peaked at 27.33%, according to October readings from the local statistics office. To combat the hydra-headed ugly headline inflation rate, the monetary policy switched to tightening with successive increases in benchmark interest rate hikes.

The monetary policy rate in Nigeria peaked at 18.75% as the apex bank moved to reduce instability in the price level. This has failed, like other policies and analysts are expecting consumer inflation to climb further throughout the year.

With an expectation that the renewed hope agenda would achieve results as Nigeria’s new president Bola Tinubu embarked on tough economic reforms, foreign investors have sometimes halted their risk-off sentiment on Nigeria’s Eurobond.

In Nigeria’s sovereign Eurobonds market on Wednesday, buy sentiment was evident across the short, mid and long ends of the curve as the average yield retreated by 5 basis points to settle at 10.53%, Cowry Asset Limited told investors in an email.

In the local bond market, trading activity was mildly bullish, due to yield reduction in the APR-37 and JUN-38 FGN papers, thus dragging the average yield on FGN Bonds lower by 2bps to 15.59%.