Nigeria’s Eurobonds Yield Sinks to 9% as Demand Heats Up
The average yield fell sharply as foreign portfolio investors (FPIs) rushed into Nigeria’s Eurobonds after the country made a new visit to the international capital markets.
Unmet demand from last week’s Eurobond sale spurred increased demand for Nigeria’s notes in the secondary market. The Nigerian government priced new sovereign Eurobonds worth $2.2 billion as part of efforts to raise funds to support the country’s huge budget deficit.
Nigeria’s Eurobond was significantly oversubscribed, with demand of $9 billion against a $2.2 billion allotment. Nigerian government issued 6.5- and 10-year Eurobonds to offshore investors at 9.625% and 10.375% yields, according to the Debt Management Office.
FPIs were active across the sovereign Eurobond curve, picking up maturities at attractive levels, with a major focus on the mid-to-long end.
Strong buying across the short, mid, and long segments of the yield curve led to a 0.08% decrease in the average yield, which now stands at 9.18%, investment firm Cowry Asset Limited said in a note.
Fixed income market analysts noted that the Eurobond market initially showed mixed sentiment but traded bullish for most of the week. With expectations and elevated yields, interest was noticeable in Sub-Saharan African (SSA) and North African papers.
In the SSA Sovereign Eurobond space, buy interest prevailed as average yields fell 2.1ppt to settle at 6.4%, Afrinvest Limited told investors in a note.
Analysts said this positive performance was predominantly driven by strong buying interest on Nigeria’s freshly issued papers – NIGERIA 2033 and 2031 instruments, with yield decline of 67bps and 62bps, respectively. #Nigeria’s Eurobonds Yield Sinks to 9% as Demand Heats Up#
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