Foreign portfolio investors have shown renewed interest in Nigeria’s Eurobonds, as improved market sentiment has driven demand for the country’s dollar-denominated assets. Analysts attribute this optimism to a combination of recent U.S. Federal Reserve decisions and Nigeria’s ongoing economic reforms.
Following the Federal Reserve’s recent rate cut of 25 basis points, which brought rates to a range of 4.50%–4.75%, markets saw a bullish shift that attracted investors to high-yield assets, including Nigeria’s Eurobonds. Elevated yields on these bonds have continued to appeal to foreign investors, enhancing demand across all bond tenors.
This market momentum also reflects optimism around Nigeria’s economic policies and strengthened confidence in the nation’s ability to repatriate funds, though the market is still awaiting a reclassification by the MSCI Index to restore Nigeria’s status in the frontier market.
AIICO Capital Limited highlighted a marked buy pressure across short, mid, and long ends of the yield curve, causing the average yield to fall by 24 basis points to settle at 9.31% by the week’s end. Nigerian, Angolan, and Egyptian bonds were among the African assets benefiting from this trend, with Nigeria’s Eurobonds witnessing gains of up to $2.
However, toward the close of the trading week, a round of profit-taking followed a sustained period of buying interest.
TrustBanc Capital Limited, in a report to investors, noted that Nigeria’s yield curve exhibited significant interest, particularly at the middle segment, as traders adjusted their strategies following the U.S. election outcome.
The firm anticipates that rate cuts under the new U.S. administration may proceed at a more measured pace, impacting future bond demand.
Analysts foresee a mix of sentiments moving forward, with AIICO Capital predicting increased profit-taking at the start of the new trading week as investors react to the recent gains.
