Nigerian and other African sovereign Eurobonds saw significant selloffs as foreign portfolio investors (FPIs) moved toward safer assets amid heightened global uncertainty. This was primarily triggered by U.S. President Donald Trump’s decision to impose higher tariffs on imports, sparking a wave of risk-off sentiment that negatively impacted global markets, including those in Africa.
Details from market transactions revealed that African Eurobonds, especially those linked to oil-rich nations like Nigeria and Angola, bore the brunt of the selling pressure. Investors were assessing the impact of the new tariffs, leading to concerns about the potential for increased borrowing costs and economic strain.
While there was a brief respite due to bargain-hunting driven by discounted bond prices and some optimism over tariff negotiations, the rally quickly lost momentum. This was exacerbated by the White House’s denial of reports suggesting a pause in tariff increases, which caused further market volatility.
As a result, yields on Nigerian Eurobonds surged, with the average benchmark yield rising to 11.65%, the highest level seen since October 2023. This was accompanied by an increase in demand for foreign currency, further pushing pressure on the bond market.
Analysts at TrustBanc Financial Group Limited predicted that prolonged selling and weak economic data would continue to exert downward pressure on African markets, pushing up government borrowing costs. Similar bearish trends were observed in other African markets, including Ghana, Egypt, and Angola.
With investor confidence still fragile, analysts expect the bearish sentiment to persist, albeit at a slower pace.
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