Foreign portfolio investors ramped up purchases of Nigeria’s U.S. dollar-denominated sovereign bonds last week, supported by expectations of a U.S. Federal Reserve rate cut.
The Nigerian Eurobond segment ended the week on a strong note, buoyed by broad-based demand across the curve. Average yields fell by 15 basis points week-on-week to 7.86%, as investors sought higher returns from emerging markets against the backdrop of weakening U.S. economic data.
Nigeria’s dollar bonds currently offer about 8% annual returns—double the yield on 10-year U.S. Treasuries and broadly in line with peer African issuers. Investment banking firm Cowry Asset Limited noted that demand was strongest for mid- to long-dated maturities, reflecting appetite for duration amid falling U.S. Treasury yields.
AIICO Capital Limited highlighted that African Eurobonds traded mixed through the week but ended firmer as attention turned to the Fed’s September policy meeting. Early gains in Nigerian paper were driven by weaker U.S. payroll figures and mounting confidence in a rate cut, with markets fully pricing in a 25-basis-point reduction and assigning a slim probability to a deeper 50-basis-point move.
While sentiment wavered midweek following sharp downward revisions to U.S. job growth, softer wholesale inflation and cooling producer prices reinforced expectations of monetary easing. By Thursday, U.S. CPI data showed headline inflation rising to 2.9% year-on-year, while jobless claims climbed, strengthening conviction that the Fed will act.
Investors also tracked geopolitical risks, including heightened U.S.–Russia tensions and renewed tariff proposals by former President Trump. Despite these uncertainties, Nigerian Eurobonds closed the week firmer, with mid-yields consolidating around 7.9%.
Markets are now pricing over a 90% chance of a 25-basis-point cut at the Fed’s September meeting and see roughly 75% odds of three rate cuts in total by year-end, reinforcing expectations of sustained appetite for higher-yielding emerging-market assets.
