In February, Nigeria’s Eurobond market showed positive trends, with yields falling to 8.80 percent due to strong foreign investor interest. The country outperformed the Sub-Saharan African Eurobond market, where yields dipped to 8.4 percent. Analysts predict continued market strength, supported by liquidity and a dovish interest rate outlook.
In February, Nigeria’s Eurobond market demonstrated resilience, concluding positively amid growing foreign investor confidence. The average yield for Nigeria’s Eurobonds fell to 8.80 percent, down 41 basis points from 9.21 percent at the start of the month, suggesting robust investor demand. This performance marked Nigeria’s outperformance relative to the Sub-Saharan African Eurobond market, where average yields decreased to 8.4 percent, reflecting a 27 basis point drop.
According to analysts at Afrinvest, the increased interest in the region stems from improving macroeconomic conditions and a shift towards lower interest rates. They noted that Kenyan bonds achieved notable gains, as yields declined by 49 basis points alongside the introduction of a centralized bond reporting framework. Nigeria’s Eurobond performance followed this positive trend despite experiencing slight sell-offs towards the month’s end.
CSL analysts attributed the decline in yields to global risk-off sentiments, geopolitical tensions, and significant economic data releases. Recent U.S. economic indicators, including a Q4 GDP growth of 2.3 percent and an unforeseen rise in jobless claims to 242,000, have raised concerns regarding labour market strength, contributing to cautious trading in emerging markets.
Unlike Nigeria, which faced yield increases across its bonds amid sell-offs, countries such as Kenya and South Africa maintained bullish trends in their Eurobond markets. For instance, Kenya’s 2028 bond yield decreased by 0.44 percent, indicating sustained investor interest, alongside similar declines in bonds issued by Benin Republic and South Africa.
Looking forward, Afrinvest predicts favorable market conditions driven by substantial liquidity from upcoming coupon payments and debt maturities. Furthermore, a dovish outlook on interest rates is expected to bolster this bullish sentiment, suggesting that the pursuit of higher yields will remain a central theme fostering offshore interest in the Sub-Saharan African Eurobond market.
In summary, Nigeria’s Eurobond market showcased a positive performance throughout February, underpinned by strong foreign investor confidence and a notable drop in yields. While some regional markets experienced sell-offs, countries like Kenya continued to attract investor interest. With anticipated liquidity from upcoming payments and a supportive interest rate outlook, the market is expected to maintain its positive trajectory, further drawing international attention to Sub-Saharan Africa’s Eurobond opportunities.
Original Source: businessday.ng
