Riskoff Sentiment Pushes Yield on Nigeria Eurobonds to 19.54%
The average yield on Nigeria US dollar bonds rose by 12 basis points to close at 19.54% at the international market following a slowdown in headline inflation. Key macroeconomic figures are improving while the naira has enjoyed some levels of stabilised due to support given by the monetary authority.
Demand for local bonds has continue to rise amidst elevated yield. Analysts expect a shift in market dynamics to cause yield repricing as the debt office plans March auction. On Monday, bearish sentiment persisted at the Eurobond market. Risk-off sentiment dominated trading activities at Eurobond market with some Africa sovereign assets facing sell pressures.
Selloffs were seen across Nigerian Eurobond tenors as foreign portfolio investors reacted to decline in headline inflation to 23.18%. The persistent selling pressure pushed prices lower amid broader market uncertainty, with participants staying on the sidelines for clearer signals on global risk appetite.
Weaker-than-expected sales data also raised concerns about economic momentum, adding to speculation about the Federal Reserve’s next interest rate move and boosting demand for safe-haven assets. By the close, the average mid-yield for Nigerian bonds rose. Traders trimmed Nigeria’s sovereign Eurobonds holdings across the short-, mid-, and long-term maturities.
The market saw a sell touch on Nov-27 and Mar-29 maturities. This pushed these Eurobond paper yield higher by 15bps and 13bps, respectively. Analysts expect the negative sentiment to persist unless there is a favourable development on the international or local front.
US Bond investors are bracing for economic downturn, as they pare back risky exposures, while many are extending duration in their fixed-income portfolios, taking in to account a Federal Reserve that is in no rush to resume cutting interest rates.
Fed Chair Jerome Powell, at his press briefing on Wednesday, will probably signal that the committee will remain patient in cutting rates as the economy does not seem to be falling off a cliff. The U.S. central bank can hold off indefinitely, analysts said, as it seeks more clarity about the Trump administration’s economic policies.
Investors will also focus on Fed policymakers’ quarterly economic projections. Included in that are interest rate forecasts and what is known as the “dot plot,” which reflects how much easing is expected. The December dot plot called for two rate cuts this year, which would leave the fed funds rate at 3.9%. #Riskoff Sentiment Pushes Yield on Nigeria Eurobonds to 19.54% NDLEA Intercepts US, Saudi Arabia-Bound Cocaine, Others
