Foreign investors sell Nigerian, African issuers eurobonds

Yields on Nigerian Eurobonds rose as African issuers confront significant selloffs from offshore investors seeking refuge amid escalating tensions in the Middle East.

This selloff reflects a sharp increase in risk aversion, especially given the recent U.S. inflation rate of 2.4% and heightened geopolitical risks following U.S.-Israel strikes on Iran.

The prospect of a U.S.-Iran conflict is unsettling global financial markets, prompting investors to realign their portfolios swiftly toward gold and other safe-haven assets.

Interestingly, analysts assert that oil-linked African issuers are poised to capitalise on the unrest, as the global price of crude oil has surged, boosting foreign exchange receipts for Nigeria, Angola, and other oil-producing nations.

The average yield on Nigerian Eurobonds has risen by 6 basis points to 7.04%, signalling a clear softening in demand and a distinctly risk-averse approach among offshore investors regarding Nigeria’s dollar-denominated sovereign instruments.

Across Nigeria’s Eurobond curve, yields are trending upward. The Nov-2027 bond has increased by 7 basis points to 5.42%, while the Sep-2028 and Mar-2029 bonds have risen by 6 and 4 basis points, reaching 5.66% and 5.89%, respectively.

Mid-term bonds are demonstrating resilience, with the Feb-2030 bond climbing 12 basis points to 6.30% and the Jan-2031 bond up 11 basis points to 6.67%.

The longer-term bonds are also following suit, with the Jan-2036 bond rising 5 basis points to 7.55% and the Feb-2038 bond climbing 3 basis points to 7.69%.

Ultimately, the average yield on the Nigerian Eurobond benchmark has widened by 5 basis points to 7.06%. Market dynamics will undoubtedly.