Nigeria’s Eurobond Yield Falls to 8.6% on Bargain Hunting
Increased demand for Nigeria’s Eurobond has caused average yield to reduce by 31 basis points on the back of improved macroeconomic indicators, settling at 8.6%.
Nigeria’s reforms have continued to boost offshore investors’ sentiment, supported by relatively strong yields compared with some benchmark global fixed interest securities assets.
The 30-year US Treasury yield declined 0.043 percentage points to 4.846% at the close of the trading session on Friday, down for three weeks straight. Also, 10-year US Treasury yield declined 0.091 percentage point to 4.283% last week, and the price rose 23/32 to 99 23/32.
Trade wars regain centre stage, fueling a Treasury selloff that boosts yields. Trump ends trade talks with Canada because of a Canadian tax on digital services. Earlier, the White House touted progress on rare-earth negotiations with China.
Amidst the quest for better returns, offshore investors’ attention shifted to the African market, where huge transactions were executed across issuers. Nigeria remains the center of attraction due to large economic balance sheet and growth prospects with declining external risks.
Foreign investors’ appetite for the country’s foreign currency-denominated bonds improved following Nigeria’s exit from the International Monetary Fund debt lists and much easier capital repatriation from the local market.
Last week, African Eurobonds experienced a volatile week driven by geopolitical tensions and shifting global monetary expectations, analysts said in an update. The Eurobond market opened lower as oil prices spiked after President Trump backed Israeli strikes on Iran, prompting fears of supply disruption via the Strait of Hormuz.
However, markets calmed after Iran’s limited response caused no casualties. A ceasefire announcement and dovish signals from Fed Chair Powell spurred a mid-week rally, with Nigerian and Egyptian papers outperforming.
Angola’s bonds lagged due to oil price volatility and debt concerns. Later in the week, profit-taking trimmed gains despite Trump’s assertion that the conflict was “over” and Fed rate cuts remained possible.
Last moment trading detailed on Friday showed that investor appetite remained strong across all tenor buckets. Buy interest was particularly pronounced in both the short and long ends of the curve, leading to a broad-based decline in yields.
As a result, average yields on Nigeria’s Eurobonds fell by 0.36% week-on-week to close at 8.61%. The current mood is likely to continue in the new week even after May’s inflation data came in hotter than expected.
With prices still rising faster than the Fed’s 2% target, Chair Powell warned this could delay any rate cuts. #Nigeria’s Eurobond Yield Falls to 8.6% on Bargain Hunting Dangote Refinery to Debut on Stock Market by 2026
