Nigeria’s Eurobond Yield Hits 11% as Foreign Investors Take Profit
The average yield on Nigeria’s sovereign Eurobond has started to race near 11% due to sell down in the foreign currency denominated borrowing instrument trading in the international market.
Nigeria’s worsening macroeconomic indicators and protests weighed on foreign investors sentiment amidst U.S recession fears. Traders said bearish sentiment prevailed across the short, mid, and long segments of the yield curve in Nigeria’s sovereign Eurobonds market.
The sell spree of Nigeria’s Eurobonds resulted in a 0.50% rise in the average yield, according to fixed interest securities analyst at Cowry Asset Limited.
A similar experience was witnessed in the local bond market on Monday as investors took cover by selling down the naira assets amidst rising buckets of uncertainties in the economy.
The average yield advanced by 14 basis points to 19.6% as investors continue to seek high returns on investment. Traders said the average yield increased at the short (+53bps) end as investors sold off the MAR-2025 (+256bps) bond but closed flat at the mid and long segments.
The Nigerian sovereign Eurobonds market experienced selloffs across the curve, in tandem with global headwinds. Consequently, the average mid-yield for the Nigerian papers increased by 50 basis points to 10.95%.
Gilt yields rise, tracking moves in U.S. Treasury yields after stronger-than-expected ISM services data released on Monday afternoon eased market concerns about a potential recession in the U.S.
The yield on the US 10-year Treasury note rose above 3.8% on Tuesday after hitting an over one-year low of 3.67% in the previous session, as investors weighed risks of a US recession. A weak jobs report released on Friday stoked fears of an economic downturn, prompting traders to rush for safe-haven assets including US Treasuries.
Markets also priced in over 100 basis points of total easing from the Federal Reserve this year, betting on a larger 50 bps rate cut in September. Moreover, market rumors spread that the Fed was considering an emergency rate cut to provide liquidity amid a global market selloff.
However, analysts warned that recession concerns may be overstated and that the unwinding of the yen carry trade will stabilize. Data released on Monday also showed that US services activity rebounded more than expected in July. Meta Unveils Grants to Empower AI-Driven Organisations
