Foreign investors buy Nigerian bonds, yield falls to 7.03%
By the AFREEQUE newsroom, based on Punch
Foreign purchases of Nigerian dollar bonds have pushed their average yield down to 7.03%, according to Cowry Asset Limited. Demand focused on short- and medium-term maturities, notably the FGN Euro 3 and FGN Euro 7 bonds, ahead of new inflation data and global oil prices.
The average yield on Nigeria’s sovereign Eurobonds fell by four basis points to 7.03%, driven by increased purchases by foreign investors of Nigeria’s dollar-denominated debt, according to Cowry Asset Limited.
The decline was particularly marked for the FGN Euro 3 and FGN Euro 7 bonds, whose yields each fell by 24 basis points, to 5.96% and 7.23%. The yield on FGN Euro 5 fell by 21 basis points to 6.83%, that of FGN Euro 10 by 19 points to 7.65%, while FGN Euro 20 fell by 14 points to 8.34%, Punch reports.
The move follows an average 16-basis-point decline in benchmark Nigerian Eurobond yields the previous week. Investors are positioning themselves ahead of the release of new inflation data and developments in global oil prices, while analysts cited by Punch estimate that oil revenues and continued economic reforms are supporting demand.
Nigerian economist Chukwunonso Iheoma said international interest rates, crude oil prices and domestic inflation would remain key determinants of investors’ appetite for Nigeria’s external debt. He warned that inflationary pressures and high global borrowing costs could limit a further decline in yields.
