Because of the selloff in foreign currency-denominated borrowing instruments trading on the international market, the average yield on Nigeria’s sovereign Eurobond has begun to gallop toward 11%.
Amid concerns about the US recession, global investors’ sentiment was affected by Nigeria’s protests and worsening macroeconomic statistics. In Nigeria’s sovereign Eurobonds market, traders reported that pessimistic sentiment pervaded the short, mid, and long regions of the yield curve.
The average yield increased by 0.50% as a result of the sell-off of Nigeria’s Eurobonds, a fixed-interest securities analyst at Cowry Asset Limited reported.
Similar events were seen on Monday in the local bond market as investors fled the mounting waves of economic uncertainty by selling down their naira holdings.
The average yield advanced by 14 basis points to 19.6% as investors continue to seek high returns on investment. Traders said the average yield increased at the short (+53bps) end as investors sold off the MAR-2025 (+256bps) bond but closed flat at the mid and long segments.
The Nigerian sovereign Eurobonds market experienced selloffs across the curve, in tandem with global headwinds. Consequently, the average mid-yield for the Nigerian papers increased by 50 basis points to 10.95%.
Gilt yields rise, tracking moves in U.S. Treasury yields after stronger-than-expected ISM services data released on Monday afternoon eased market concerns about a potential recession in the U.S.
The yield on the US 10-year Treasury note rose above 3.8% on Tuesday after hitting an over-one-year low of 3.67% in the previous session as investors weighed risks of a US recession. A weak jobs report released on Friday stoked fears of an economic downturn, prompting traders to rush for safe-haven assets, including US Treasury bonds.
Markets also priced in over 100 basis points of total easing from the Federal Reserve this year, betting on a larger 50 bps rate cut in September. Moreover, market rumors spread that the Fed was considering an emergency rate cut to provide liquidity amid a global market selloff.
However, analysts warned that recession concerns may be overstated and that the unwinding of the yen carry trade will stabilize. Data released on Monday also showed that US service activity rebounded more than expected in July.
