In February, Nigeria’s Eurobond market recorded positive momentum with a decline in average yield to 8.80 percent from 9.21 percent, indicating strong foreign investor interest. Yields in the Sub-Saharan African market also declined, with Nigeria outperforming the region. Analysts anticipate continued positive market trends supported by liquidity from coupon payments and maturing bonds, reflecting ongoing confidence in Nigerian Eurobonds.
Nigeria’s Eurobond market experienced a significant rally in February, reflecting a notable increase in foreign investor confidence. Data from the Debt Management Office (DMO) indicates that the average yield on Nigerian Eurobonds decreased to 8.80 percent by the end of February, a reduction of 41 basis points from the 9.21 percent recorded at the start of the month, showcasing a robust appetite from international investors.
In comparison, the Sub-Saharan African Eurobond market saw yields decline by 27 basis points, averaging 8.4 percent, whereby Nigeria outperformed the region overall. Analysts from Afrinvest credit this trend to the region’s appeal amid improving macroeconomic conditions and a pivot towards lower interest rates. Kenyan bonds significantly contributed to this positive trend, witnessing a 49 basis points drop in yields following the announcement of a centralized bond reporting system.
Despite minor sell-offs leading to a slight increase in yields, Nigeria’s Eurobond market showed resilience with yields adjusting from 8.79 percent to 8.80 percent. This drop in yields appears to be influenced by global market conditions, including geopolitical uncertainties and critical economic data releases, as noted by CSL analysts, who highlighted the U.S. fourth quarter GDP growth rate and rising jobless claims.
Other countries in the region exhibited mixed performance; while Ivory Coast experienced yield increases across its bonds, Kenya and South Africa remained on a bullish trajectory. Particularly, Kenya’s 2028 and 2048 bonds reported significant yield reductions, indicating continued investor interest.
Looking to the future, Afrinvest analysts project positive market performance attributed to liquidity inflows from coupon payments and bond maturities, totaling N642.6 billion and N562.5 billion, respectively. Furthermore, a dovish interest rate outlook is expected to sustain bullish sentiments, with a continued emphasis on yield prospects likely maintaining offshore interest in the Sub-Saharan African market.
In conclusion, the February rally of Nigeria’s Eurobond market is marked by enhanced foreign investor confidence, leading to a reduction in yields. Despite fluctuations due to global trends and geopolitical concerns, projections for the market remain optimistic. The anticipated liquidity inflows and favorable interest rate conditions are set to sustain interest in Nigerian Eurobonds and bolster performance in the broader Sub-Saharan African region.
Original Source: businessday.ng
