Nigeria US Dollar Bonds Yield Crossed 10%
Nigeria US dollar bonds face random sell pressures in the international securities market due to fresh risk off sentiment, lifting average yield above 10%, marking four months high in 2024.
Investors holding Nigeria’s sovereign Eurobond dumped some assets US Fed indicates plans to keep rate high for longer than anticipated. This is coming along with latest US Treasury sales.
Market data showed that the US Treasury’s 7-year auction hit a high yield of 4.716% on Thursday, which was higher than the 4.185% high in the previous auction.
Investors sentiment was however, lower with bid to cover ratio for the auction was 2.48, below the 2.61 ratio in the previous auction.
Gauging their risks along portfolio holdings, foreign investors sell down their interest in Nigeria’s US dollar bonds at the Eurobond market to unhook or free some funds tie to the assets.
The sell pressures caused yield to rise while Nigeria’s sovereign Eurobond market price declined. The negative trading activity contributed to a rise in the average yield by 0.13% to 10.03%, Cowry Asset Management Limited said in a note to investors.
The uncertainties in the macroeconomic environment has raised borrowing risks and foreign investors have been demanding for higher returns on their investment. Nigeria’s inflation rate climbing to 33.20% while benchmark rate was adjusted to 24.75% to anchor unstable price level.
According to market data, US Treasury yields rose as data show little room for interest rate cuts. The Q1 GDP headline figure was a mild 1.6% expansion. The yield on 10-year US Treasury rises 0.054 percentage point to 4.706%, the highest in more than five months.
The yield on the 2-year US Treasury jumped 6.5 basis points to 4.998%, from 4.933% on Wednesday, after piercing the 5% level.
The yield on the 10-year UK government gilt touched 4.4% on Thursday, the highest since early November, following a rise in US yields after strong PCE inflation data pushed back expectations for interest rate cuts in the US.
The core PCE price index, surged by 3.7% in Q1, accelerating from the 2% increase in the previous quarter and above the estimate of 3.4%.
In the secondary market for FGN Bonds, trading activity was on a cautious thread, as a result, the average yield declined marginally by 0.01% to close at 18.96%. #Nigeria US Dollar Bonds Yield Crossed 10%
