Nigeria Eurobond Yield Picks Up Over Sell Pressure

DMO Set To Auction N150bn Bond On FG's Behalf

Midway through the week, the benchmark yield on Nigeria’s US dollar bonds, often known as Eurobonds, increased as international investors disbursed their holdings while the Federal Reserve held steady on interest rates.

The country’s US dollar bonds saw selloffs that drove down prices as the yield increased by 21 basis points. Following the FOMC meeting, the US Fed held interest rates steady on Wednesday. The decision was made by policymakers who were unsure of whether the current tight financial conditions would be sufficient to control inflation or if further restraint would be necessary given the economy’s continued strong performance.

Investing activity in Nigeria’s sovereign Eurobonds market ended the day lower than expected due to the decision. With the largest economy in Africa struggling with domestic high inflation and a foreign exchange crisis, investor sentiment has soured.

According to bond traders, the market has seen a shift in risk sentiment for most trading sessions in the week. As a result, the average yield in the market inched higher by 21 basis points to close at 11.61% due to selling pressures.

Similarly, trading in the local bond secondary market was bearish, as the average yield advanced by 5 basis points to 15.4%, according to Cordros Capital note. Across the benchmark curve, traders noted that the average yield expanded at the short (+15bps) and long (+2bps) ends.

The yield curve shifted as fixed interest securities investors sold off the MAR-2025 (+46bps) and APR-2049 (+36bps) bonds, respectively.

Meanwhile, the average yield closed flat at the mid-segment. APR 49 FGN papers emerged as the worst performers at midweek on the back of sell interests which drove the average bond yield in the bond market higher by 4 basis points, Cowry Asset Limited told investors in a note.

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