Offshore Investors Increase Position in Nigeria Eurobonds
The Nigerian sovereign Eurobonds rallied in the international market as offshore investors increased their holdings amidst sign of global monetary easing.
Investors have been adjusting their interest across African issuers since the U.S. Federal Reserve rates cut last week. The market anticipates global central bankers to follow the path, though the European Central Bank took a break in policy adjustment at the last meeting.
The Nigeria Central Bank, like the US Federal Reserve, reduced the benchmark interest rate on the back of disinflation and naira stability.
Market analysts said foreign investors are weighing the impacts of these developments to reconstruct their portfolio with notable switches among African issuers.
On Wednesday, the African Eurobond market traded on a mixed note, supported by the recent rise in oil prices amid a decline in U.S. crude inventories.
Notably, price declines were observed at the short end of the curve; the mid- to long-dated maturities recorded modest gains.
Hence, the average yields on Nigerian sovereign Eurobonds declined by three basis points (3 bp) to 7.89%, according to Cowry Asset Limited—reflecting strong investor confidence. Investment firm AIICO Capital expects sentiment to remain positive in the near term if oil prices sustain momentum.
Oil prices climbed over 2% to a three-week high as a surprise drop in U.S. weekly crude inventories added to a sense in the market of tightening supplies amid export issues in Iraq, Venezuela, and Russia. Brent crude gained $2.17, or 3.24%, to $69.14 a barrel, while U.S. WTI improved by $1.41, or 2.22%, to $64.82.
Gold retreated from recent highs today as the dollar gained strength and investors parsed cautious signals from Federal Reserve Chair Jerome Powell.
Spot gold slipped 1.23% to $3,717.97/oz, while U.S. gold futures shed 1.21% to $3,750.15/oz, as markets awaited clearer cues on the timing of future rate cuts.
Markets expect oil prices to remain supported by short-term supply concerns despite potential longer-term oversupply risks. Offshore Investors Increase Position in Nigeria Eurobonds Dangote Sugar Refinery Plunges by 10% on Huge Selloffs
