Nigeria’s Eurobond Yield Up, Offshore Investors Sell African Papers
Spooked by fresh risk-off sentiment, Nigeria’s sovereign Eurobond yield increased in the international market as foreign portfolio investors reduced their positions across African issuers on Monday.
Some African issuers’ names, including Ghana, Angola, and Egypt papers, experienced sell-offs; prices declined while their respective yields surged amidst global uncertainties. Investment analysts said the trading direction could reverse during the week in light of new data.
Fixed income market analysts had anticipated increased demand for Nigeria’s Eurobonds as headline inflation moderated by 34 bps to 21.88% year-on-year from 22.22% year-on-year in June 2025, marking the fourth consecutive month of disinflation, largely driven by favourable base effects.
Despite improved macro indicators, the nation’s US dollar denominated sovereign bonds are faced with significant sell pressures. A number of foreign investors rotated their holdings away from NOV-2027 paper, which pushed average yields up by 4 bps to 8.00%.
Despite the increase in global oil prices, the Africa Eurobond market sustained last bearish sentiment amid dampened hope of a Fed rate cut in September. In its commentary note, analysts at AIICO Capital Limited said yields are likely to stay elevated as weaker macroeconomic indicators appear to be higher than expected.
Last week, African Eurobonds posted a mixed performance as investors reacted to multiple global developments. Markets opened on a positive note, supported by the recent 25 bps interest rate cut by the Bank of England (BoE) and optimism over a potential Fed rate cut in September.
However, sentiment weakened mid-week after the U.S. July consumer price index held steady at 2.7%, and the unexpectedly strong U.S. Producer Price Index (PPI) data put pressure on U.S. Treasuries, triggering broad government bond sell-offs and tempering the expectation of a rate cut.
Despite the late-week selling pressure, major African Eurobonds ended the week higher, with Nigerian Eurobonds posting a 20 basis point reduction in average mid-yield to close at 7.84%.
Markets will trade cautiously as investors digest the outcome of meeting between Trump and Putin. The yield contraction was supported by strong interest in the Mar-2029, whose yield dropped by -25 bps to 7.12%, and Feb-2030, whose yield declined by -24 bps to 7.42%. Airtel Africa: Analysts Raise Target Price, See 70% Upside
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