Eurobond: The market has continued to assess the impact of US Federal Reserve rate cuts on debt asset portfolio returns in the international capital market. Nigeria’s sovereign US dollar bond trading in the foreign market increased, settling below 10% as investors began to restructure their portfolios due to uncertainty.
According to investment firms, foreign portfolio investors are fast altering their positions, resulting in a market selloff of Nigeria’s sovereign Eurobonds. However, some fixed income experts with worldwide coverage told MarketForces Africa that demand for Nigeria and other African Eurobonds will improve in the coming months.
Yesterday, investors offloaded Nigeria’s US dollar bonds across standard maturities. Pressure on the short, mid and long ends led to a 0.16% increase in the average yield to 9.75%, Cowry Asset Limited said in a note to investors.
The US Fed 50 basis points rate cut is expected to trigger increased flows of hot money into African markets with an optimized return as sole objective. Top African countries with elevated yields on sovereign assets would start seeing an influx of foreign portfolios that would be redirected as US market prices in rate adjustments, analysts said.
In the African Eurobonds space, selling rallied persisted from last week. In a note, fixed income analysts at AIICO Capital Limited said they observed selling interests across Nigeria, Angola, and Egypt.
On average, the mid-yield across the Nigerian curve increased. “We anticipate market attention will be on PMI data this week, followed by the Fed’s preferred inflation measure,” AIICO Capital said. Elsewhere, the yield on the 2-year Treasury note gained less than 1 basis point, to 3.576%, according to Dow Jones Market Data.
The yield on the 10-year Treasury note gained 1.3 basis points, to 3.740%. The yield on the 30-year Treasury bond increased by 1.3 basis points, to 4.083%.
