Increased demand for Nigeria’s sovereign Eurobond brought the average yield down in the foreign market, according to dealers, despite double-digit inflation and interest rates in the domestic economy.
Cowry Asset Limited informed investors over the weekend that buying activity at the short, mid, and long ends of the yield curve resulted in a 13 basis point drop, resulting in an average yield of 9.58%..
Analysts said the Eurobonds market started the week on a pessimistic note, led by huge sell-offs in African bonds, lower prospects for aggressive Fed rate reduction, and increased political instability.
However, confidence resurfaced following constructive conversations between Angola and the International Monetary Fund regarding a new loan program, as well as the Finance Minister’s statement that there will be no Eurobond sales this year.
This shift boosted Angola’s Eurobonds, which influenced Nigerian and Egyptian bonds, AIICO Capital Limited said in a note.
At the close of the week, yield in the SSA Eurobond market closed at 8.7%, excluding Ghana papers due to the delisting of its old tickers following debt restructuring measure, according to Afrinvest Capital Limited.
Bloomberg reported that Ghana’s restructured Eurobonds rose on their second day of trading after Fitch Ratings assessed them as out of default, assigning a ‘CCC+’ rating.
Fitch’s assessment reflects Ghana’s expected credit profile following the whole debt restructuring, with declining debt driven by fiscal consolidation. However, liquidity risks remain elevated due to high interest spending relative to revenue.
The restructured bonds offer investors the option of taking a 37.0% haircut and receiving two new bonds maturing in July 2029 and 2035, with a 5.0% interest rate until 2028, stepping up to 6.0% thereafter, or opting for a 1.5% interest rate on bonds maturing in January 2037.
Afrinvest Limited said performers in the SSA Eurobond space were the Gabon 2024 and South Africa 2041 bonds, which led the market with yield declines of 113bps and 22bps week on week, respectively
In the foreign exchange market, the Naira appreciated by 0.07%, closing at ₦1,600.00 per dollar at the official market. In the Parallel market, the Naira closed at ₦1,730 to the dollar.
