Nigeria’s US Dollar Bonds Dumped as 10-Year Yield Surges to 8%
Ahead of the Federal Reserve’s rate decision, foreign portfolio investors and asset managers dumped Nigerian US dollar bonds in international markets as sentiment soured.
The African Eurobonds segment was broadly bearish as investors made sharp portfolio adjustments ahead of this week’s Federal Reserve interest rate decision.
While a pause is widely expected in October, market participants and economists increasingly see a December 2026 rate hike as likely because of persistent core inflation and low unemployment.
Like Nigeria, investors dumped Ghana, Uganda, Egypt, and some other oil-linked issuers, pushing yields higher, while the US saw a return to positions.
In its market update, Cowry Asset Management Limited told investors that the average yield on Nigeria US dollar bonds rose by 3 basis points (bps) to 7.44%, reflecting cautious offshore investor sentiment.
Yields rose across the curve, with the 3-year FGN Eurobond yield up 6bps to 6.44%, the 5-year up 7bps to 7.18%, the 7-year up 2bps to 7.70%, and the 10-year up 6bps to 7.99%.
However, positive sentiment was noted at the long end of the curve. The Nigerian 20-year Eurobond yield eased 1bp to 8.57%, according to AIICO Capital Limited.
US Treasury yields have pulled back slightly and are hovering near multi-week lows as bond markets increasingly price in a Federal Reserve rate pause at this week’s FOMC meeting.
After surging to a 52-week peak of 5.31% in October on sticky energy inflation, the benchmark 10-year yield has consolidated around the crucial 5.00% threshold.
U.S. Treasury yields were flat on the day Monday as investors looked ahead to the central bank’s interest rate decision and a flurry of economic data this week.
The benchmark 10-year Treasury yield was little changed at 4.986%, and the 30-year Treasury bond yield dipped nearly 2 basis points to 5.299%.
The 2-year Treasury note yield rose 3 basis points to 4.716%. One basis point equals 0.01%, and yields and prices move in opposite directions. DMO Raises N2trn from Bonds to Fund Nigeria’s Budget Deficit
