Nigerian Eurobonds Dumped as U.S. Yields Hit 24-Year High
The Nigerian sovereign Eurobonds yield spiked 47 basis points (bps) as international debt market investors remained bearish across most maturities, amid subdued investor sentiment along the yield curve.
The sovereign paper mirrored developments in the African Eurobonds segment, where most oil-linked issuers faced selling pressure across maturities.
Foreign portfolio investors were adjusting positions as US Treasury yields jumped to a 2002 high after the Federal Reserve raised interest rates by 25 basis points.
US 10-year Treasury yields touched 5.34% on 1 October, the highest since 2002, and Nigeria’s dollar bonds sold off across the curve, according to AIICO Capital Limited.
The 3-year US Treasury yield rose 0.32 percentage points to 6.92%, the 5-year 0.23 points to 7.46%, the 7-year 0.26 points to 7.94%, the 10-year 0.21 points to 8.12% and the 20-year 0.24 points to 8.64%, lifting the average to 7.82% from 7.56%, the investment firm said.
With expectations of further rate hikes in the US, cautious market sentiment weighed on demand for Nigeria’s dollar-denominated debt securities, pushing the average Eurobond yield up 47 bps week-on-week to 7.74%.
Analysts at CSL Stockbrokers said they expect the sovereign Eurobond market to stabilise and gradually regain a positive bias, as the recent rise in yields offers a more attractive entry point for investors.
Improved crude oil prices and their potential to strengthen Nigeria’s fiscal and external position could further support demand, although elevated global yields and geopolitical risks remain key headwinds.
Market analysts expect yields to stay elevated until the Federal Open Market Committee (FOMC) meeting on 27–28 October, with US Treasury yields near 24-year highs.
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