Nigeria’s Eurobond market ended February on a high note, indicating continued confidence among international investors.
The Debt Management Office (DMO) reports that the average yield on Nigerian Eurobonds closed at 8.80%, down 41 basis points from 9.21% at the start of February, indicating robust investor demand.
Nigeria led the area in the Sub-Saharan African Eurobond market, where rates decreased by 27 basis points to an average of 8.4 percent.
According to Afrinvest analysts, this was due to the region’s sustained appeal despite strengthening macroeconomic conditions and declining interest rate pivots.
“Kenyan bonds led gains, with yields falling 49 basis points following the announcement of plans to implement a centralized bond reporting system. The Nigerian Eurobond followed suit,” it said in its monthly report.
Even if there were some sell-offs last week, which caused a tiny uptick to 8.80 percent from 8.79 percent the week before, this monthly gain still happened.
According to CSL analysts, major economic data releases, geopolitical worries, and global risk-off trends all significantly impact the yield decline.
In a letter to investors, CSL analysts stated, “In the U.S., Q4 GDP growth came in at 2.3 percent, in line with expectations, while jobless claims unexpectedly rose to 242 thousand (vs. 222 thousand forecast), fuelling concerns over labour market softness.”
Nigerian Eurobonds were among the emerging market assets that saw cautious trading due to these developments.
Ivory Coast rose in rates across all bond tenors with significant sell-offs, similar to Nigeria.
Nonetheless, nations like South Africa and Kenya followed the optimistic trajectory.
Investor interest was demonstrated by the 0.44 percent yield drop on Kenya’s 2028 bond and the 0.06 percent yield drop on Kenya’s 2048 bond.
The yields on the 2038 Eurobond issued by the Benin Republic and the 2041 Eurobond issued by South Africa also decreased.
According to Afrinvest analysts, the market will do well in the future due to significant liquidity inflows from coupon payments of N642.6 billion and maturities of N562.5 billion.
“Additionally, a dovish interest rate outlook should reinforce the bullish bias. The chase for yield is anticipated to be a major theme for long-term offshore interest in the SSA market,” it stated.
