Nigeria’s US Dollar Bond Yield Rises After Sell Pressure

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Nigeria’s US dollar bonds trading on the foreign market saw sell pressure due to the country’s growing inflation rate, which caused the average yield to increase by 12 basis points. The deteriorating consumer price index, which printed at 33.20% in April 2023—a 10% increase above 23.20%—was the catalyst for the risk-off attitude.

The yield on Nigeria’s national Eurobond has been held below 10% as the authorities continue to reroute policy and restructure the economy. A risk-off attitude toward US Treasury notes has also been observed despite the uncertain anticipation that the Fed would lower interest rates in June 2024.

The demand for government bonds, Treasury bills, and OMO bills has been steadily increasing in the local debt capital market as a result of higher rates being offered across tenors.

Benchmark yield on naira assets average 20% and investors are waiting to see catalysts that would cause yield repricing as widening inflation rate reduce real return on investment.

In the secondary market for FGN Bonds, the average yield inched higher by 0.03% to close at 19.29% on Monday. In Nigeria’s sovereign Eurobonds market, trading activity exhibited a bearish trend, resulting in a rise in the average yield by 0.12% to reach 9.86%.

Yields on benchmark U.S. 10-year Treasuries hit five-month highs on Monday after stronger-than-expected retail sales data from March suggested the Federal Reserve could delay cutting interest rates this year.

The yield on 10-year US Treasury notes was up 12.9 basis points at 4.628%. The yield on the 30-year Treasury bond was up 13.5 basis points at 4.739%. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 5.3 basis points at 4.935%, but remains slightly below its highs from last week.

Nigeria’s debt office raised N626.82 billion from bonds auction conducted on Monday, selling 2029 FGN Bond at 19.30%, 7-year bond was sold at 19.75% and 10-year bonds was priced at 20%.

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