Nigerian US Dollar Bonds Yield Dips as FPIs Appetite Improve
The average yield on Nigerian sovereign Eurobonds or the US dollar bonds dipped slightly in the international debt market as foreign portfolio investors (FPIs) increased their portfolio holdings.
The sovereign Eurobonds market was positive, particularly with buying interest in NOV-25, SEP-38, and FEB-30 maturities, with their yields dropping by 4 bps each, Cowry Asset Management Limited said in a Thursday note.
This dragged the average yield on Nigerian US dollar bonds lower by 3 basis points to 9.80%.Analysts, fixed interest securities traders said foreign investors reacted to the European Central Bank (ECB) interest rates cut.
For the first time in roughly five years, the ECB slashed rates to drive growth in the Eurozone. There is expectation that the US Fed will also follow the same line, which could reverse global central bankers’ hawkish stance.
The ECB said Thursday that it would reduce its key interest rate to 3.75% from 4%, its first rate cut in almost five years. Future interest-rate decisions will be based on incoming economic data, the bank said in a statement.
The high global interest rate drove out hot money from African markets. Nigeria saw the exit of foreign portfolio investors due to highly competitive rates on debt assets elsewhere.
The yield on the 2-year US Treasury was little changed at 4.723%, versus 4.728%. The yield on the 10-year US Treasury was at 4.29%, versus 4.289% on Wednesday. The yield on the 30-year Treasury rose less than 1 basis point to 4.445%, from 4.440% on Wednesday.
Meanwhile, trading activity on Federal Government of Nigeria (FGN) bonds ended on a calm note. In the secondary market, investors offloaded the MAR-25 FGN bonds and JAN-26 bonds instruments.
Investors profit taking activities dragged these bonds yield downward by 2bps and 1bp, respectively. Despite this movement, the average secondary market yield remained unchanged at 18.73% from the last close, Cowry Asset said in its market update. #Nigerian US Dollar Bonds Yield Dips as FPIs Appetite Improves Naira Steadies as Banks Issue Update on FX Purchase
