Nigeria’s Eurobond market closed February positively with yields dropping to 8.80 percent, reflecting strong foreign investor confidence. Despite some sell-offs, the overall market performance outshined the Sub-Saharan region, with analysts suggesting continued strong liquidity and a dovish outlook as key influencers for future investor interest.
In February, Nigeria’s Eurobond market exhibited a positive trend, reflecting sustained confidence from foreign investors. The average yield on Nigerian Eurobonds concluded the month at 8.80 percent, marking a decrease of 41 basis points from the 9.21 percent recorded at the start of the month, demonstrating robust investor interest.
The Sub-Saharan African Eurobond market also experienced a decline in yields, averaging 8.4 percent, with Nigeria outperforming the regional average. According to Afrinvest analysts, this trend is attributed to an overall increase in interest across the region due to improving macroeconomic conditions and lower pivot rates.
Kenyan bonds particularly led this positive development, with yields lowering by 49 basis points after the announcement of a centralized bond reporting system. Notably, while there were minor sell-offs last week causing yields to rise slightly from 8.79 to 8.80 percent, the overall outlook remained optimistic.
Analysts from CSL attributed the decline in yields to global market conditions, geopolitical uncertainties, and recent key economic data releases. In the U.S., the Q4 GDP growth met expectations at 2.3 percent, although an unexpected increase in jobless claims raised concerns.
While Nigeria maintained its yield performance, Ivory Coast experienced a downturn across all its bond tenors due to significant sell-offs. Conversely, Kenya and South Africa continued to attract positive investor sentiment, showing reductions in yields for their respective bonds.
Looking forward, Afrinvest anticipates a favorable market outlook driven by strong liquidity inflows from coupon payments of ₦642.6 billion and maturities of ₦562.5 billion, alongside a dovish interest rate environment. This suggests that the search for yield will continue to attract foreign interest within the Sub-Saharan market.
In summary, Nigeria’s Eurobond market saw a favorable performance in February, characterized by decreased yields and strong foreign investor interest. The positive trend was reinforced by broader macroeconomic improvements within the region. Continued liquidity and a supportive interest rate environment are expected to maintain this positive trajectory in the future, making Nigeria an attractive destination for investors in Eurobonds.
Original Source: businessday.ng
