Nigeria’s Eurobond Rally Ahead of Short Duration Expiration
Nigeria’s sovereign Eurobond yield settled lower, dropping by two (2) basis points below its open rate as foreign portfolio investors and asset managers increased bets, reflecting positive sentiment in the international market.
The sustained rally on Nigeria’s external borrowing instrument reflects market perception of the country’s ability to meet short-term obligations with near-zero default risk following successes attributed to local economic reforms. Foreign investors took particular interest in the country’s sovereign Eurobond note, which is set to mature in November, dragging yield downward.
The sustained yield slowdown on Nigeria’s sovereign US dollar-denominated bonds suggests lower funding costs in its external borrowings, supported by recent ratings agencies upgrades from S&P Global, Moody’s, and Fitch Ratings.
Also, the country successfully exited the International Monetary Fund debt list, suggesting improved creditworthiness, which could reduce costs of its anticipated external borrowings. In its market update, Cowry Asset Limited told investors that the Nigerian Eurobond market closed positive—especially with interest in the NOV-2027 paper—pushing average yields down by 2 bps to 8.20%.
Details looking across issuers showed that African Eurobonds rallied on improved investor sentiment, following signals that potential U.S. sanctions against Russia, in response to its ongoing war in Ukraine, may proceed this week, boosting demand for emerging market assets.
In line with this trend, the Nigerian Sovereign Eurobond market recorded a modest rally, with benchmark yields declining by an average of 2 bps, supported by broad-based buying interest across the curve. #Nigeria’s Eurobond Rally Ahead of Short Duration Expiration
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