Risk-Off Sentiment: Sell Pressures Hit Oil-Linked African Eurobonds
The yield on Nigerian Eurobonds surged as foreign investors sold off dollar-denominated bonds linked to oil-producing African nations in the international market.
The African Eurobond market experienced a distinctly bearish phase, driven by heightened caution amid global uncertainties, oil price fluctuations, and escalating geopolitical risks, prompting investors to gravitate towards safer assets.
Notably, selling pressures permeated the entire yield curve, with similar trends observed in Angola and Egypt. In striking contrast, Kenya has recorded notable gains, according to TrustBanc Financial Group.
Analysts at AIICO Capital reported that the uptick in yields is directly tied to ongoing oil price volatility, which remains around the $70-71 per barrel mark, underscoring the profound impact of oil prices on market dynamics and investor behaviour.
The backdrop of recent softer inflation reports from the U.S., coupled with persistent geopolitical tensions in the Middle East, further exacerbates the market’s cautious outlook.
Across Nigeria’s Eurobond landscape, yields have consistently trended higher due to some offshore investors’ portfolio-balancing efforts.
For instance, the yield on the November 2027 bond crept up 1 basis point to 5.21%, while the yields on the September 2028 and March 2029 bonds surged 3 and 7 basis points to 5.49% and 5.79%, respectively.
Fixed-income market analysts highlight that mid-term bonds have also shown signs of resilience, with the February 2030 bond rising by 8 basis points to 6.13%, and the January 2031 bond climbing by 9 basis points to 6.46%.
On the long end of the curve, the yield on the January 2036 bond experienced an increase of 11 basis points to 7.44%, while the December 2034 bond rose by 8 basis points to 7.27%.
In summary, the average benchmark yield on Nigerian Eurobonds has widened by 6 basis points to 6.94%. This trend reflects ongoing investor unease regarding market responses to oil price volatility and significant macroeconomic developments.
Investors must remain vigilant as these dynamics unfold, as they carry considerable implications for future investment strategies in the region. #Risk-Off Sentiment: Sell Pressures Hit Oil-Linked African Eurobonds CBN Cuts 1-Year Treasury Bill Rate by 138bps, Rejects Bids
