Nigeria US Dollar Bonds Yield Rises to 10.2%

Selloffs experienced at the international debt capital market on Nigeria’s sovereign Eurobonds market segment provoke a marginal spike in the yield curve. Foreign investors’ heightened risk-off sentiment prevailed across the yield curve, resulting in a 3 basis points increase in the average yield to 10.20%, Cowry Asset Limited said in a note.

The market reacted to the recent decision of the Nigerian central bank to reduce foreign currency asset holdings of local banks. The new policy comes after the apex bank spotted FX speculative tendencies of banks with net FX positions. 

Investors in the Nigerian fixed income market reacted to the development in the same manner amidst a tight timeline set for banks to comply with the CBN demand. In the secondary market, FGN bond experienced sell pressures.

The average yield expanded by 4 basis points to 14.4%. Recall that the debt office conducted a bond auction to raise funds for government earlier in the week. In the secondary market for FGN bonds, the average yield contracted at the short (-17bps) end, as investors demanded the MAR-2024 (-209bps) bond.

However, yield expanded at the long (+17bps) end due to the sell-off of the APR-2049 (+113bps) bond. Conversely, the average yield closed flat at the mid-segment. #Nigeria US Dollar Bonds Yield Rises to 10.2% Banks Face Risks over 24hrs FX Positions Sell Down