Riskoff Sentiment Provokes Nigeria’s Eurobonds Yields Surge
Riskoff sentiment provoked a spike in Nigeria’s Eurobonds yield ahead of U.S consumer price index data release. The latest selloffs in the market reversed previous trend just after Nigeria issued U.S dollar bonds worth $2.2 billion.
Unmet bids from the oversubscribed, high priced sovereign Eurobonds across 6.5-Year and 10-Year notes had filtered into the secondary market.
Fixed income market analysts told MarketForces Africa that foreign portfolio investors’ appetite for Nigeria’s US dollar bonds has been strong.
The market expects demand for sovereign assets to increase after the U.S Fed slash fed funds rate further in December.
U.S inflation data is expected to be released midweek and analysts noted the bearish trade reflects how sensitive assets managers have become to inflation and interest rates trend in the recent time.
In Nigeria’s sovereign Eurobonds market, sell pressure across the short, mid and long segments of the yield curve led to a 0.04% increase in the average yield, which now stands at 9.21%, Cowry Asset Limited said.
Analysts said profit takers offload their holdings as part of portfolio rebalancing efforts. Offshore investors sell down interest the Mar-29 and Feb-32 maturities, causing these asset yield to rise by 5bps and 6bps, respectively.
Similar bearish sentiment was observed across the curve in Ghana, Egypt, and Angola. The upcoming U.S inflation figures would shed light on the Federal Reserve’s future interest rate decision, analysts said.
AIICO Capital Limited said broad selling pressure was observed across the regions in the SSA and North African markets. Despite stronger Brent crude prices, oil-rich countries Nigeria and Angola saw weaker performance.
Additionally, Kenya’s Eurobonds experienced a drop following the government’s revision of its 2024 GDP growth forecast from 5.6% to 4.7% for 2023, AIICO Capital Limited said in a note. #Riskoff Sentiment Provokes Nigeria’s Eurobonds Yields Surge#
