The yield on Nigerian US dollar-denominated bonds declined slightly last week, falling by 10 basis points (0.1 percentage point) to close at 9.3%. This drop was driven by increased confidence among foreign investors in the international financial markets.
The demand for these bonds increased following the decision of the US Federal Reserve to keep interest rates unchanged. Additionally, former US President Donald Trump urged the Fed to lower rates further, creating a favorable environment for emerging market bonds, including Nigeria’s.
Investor interest in African bonds also rose, as foreign portfolio investors sought to take advantage of attractive returns. As a result, Nigerian Eurobonds due in 2025 and 2027 saw strong buying activity, leading to a decrease in their yields by 1.0 and 0.5 percentage points, respectively, over the past month.
At the start of last week, global bond markets were affected by concerns in the technology sector and competition from China in artificial intelligence. However, as the week progressed, investor interest in Nigerian bonds stabilized, with stronger buying activity also observed in bonds issued by Ghana, Angola, and Egypt. Egypt, in particular, attracted attention after issuing a $2 billion Eurobond.
Towards the end of the week, Nigerian bonds saw renewed buying interest, while Angola remained steady, and Egypt faced selling pressure. Overall, Nigerian Eurobond yields declined to 9.26% by the week’s close.
Initially, strong US economic data had pushed bond yields higher, as investors anticipated that the Federal Reserve would keep interest rates elevated for a longer period. However, the market adjusted, leading to the observed decline in yields.
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