Increased buying activity led to a collapse in the average yield on Nigerian sovereign Eurobonds, while the country’s US dollar papers saw a spike in quoted prices on the global capital market.
Following the European Central Bank’s (ECB) recent rate reduction and expectations that the US Fed would follow suit in the third quarter of 2024, Nigeria’s US dollar bond has recently experienced a raft of purchasing activity.
Expectations for the Bank of England’s rate cut are varied. However, other analysts believe that the European Central Bank (ECB) has set the standard for other central banks throughout the world to follow. It is deemed exceedingly improbable by investors that the Bank will lower interest rates during an election campaign.
The traders of fixed interest instruments at Cowry Asset Management Limited claim that there was positive sentiment in Nigerian Eurobonds. The market recorded buying interest across various maturities, particularly impacting the NOV-25, SEP-38, and FEB-30 Eurobonds.
The firm said in its update that yields for these Nigeria US dollar bonds decreased by 17 basis points, 14 basis points, and 15 basis points, respectively, leading to a 12 basis points drop in the average yield to 9.85%.
In the local market, Federal Government of Nigeria (FGN) Bonds was subdued, with investors exiting positions in the MAR-25 and JAN-26 FGN Bonds instruments.
The selloffs moves caused yields to decrease by 4 basis points and 2 basis points, respectively. Despite these movements, the average secondary market yield held steady at 18.75% compared to the previous close, traders stated.
U.S. bond yields continued to fall as investors became more optimistic that the Federal Reserve will cut interest rates later this year. The yield on the 2-year US Treasury was 4.68%, down 2.2 basis points.
The yield on the 10-year US Treasury was 4.21%, down 3.7 basis points. The yield on the 30-year US Treasury was 4.36%, down 3.4 basis points.
UK 10 Year government bond yield decreased to a 4-week low of 4.10%. Over the past 4 weeks, United Kingdom 10Y Bond Yield gained 3.86 basis points, and in the last 12 months, it decreased 27.50 basis points.
