Nigeria US Dollar Bonds Hit By Selloffs
The average yield on Nigeria’s US dollar bonds rose marginally as foreign investors trimmed their position amidst uncertainties in the local economy. The market prices of Nigeria’s sovereign Eurobond declined, causing a yield uptick amidst large repricing on borrowing instruments in the local market.
MarketForces Africa gathered that buying momentum slowed amidst US Fed rate cut expectation which some analysts believe would come mid of the year as inflation concerns eased.
In the local bond market, the same trading pattern was observed following an inverted yield on government borrowing instruments. Trading activity was slightly negative leading to an increase in the average yield by 3bps to 18.03%.
Cordros Capital Limited said across the benchmark curve, the average yield increased at the short (+2bps) and mid (+11bps) segments. This followed profit-taking activities on the MAR-2024 (+8bps) and JUN-2033 (+45bps) bonds, respectively, but closed flat at the long end.
In the sovereign Eurobonds market, negative sentiment prevailed, causing a 0.06% increase in the average yield to 9.77%, Cowry Asset Management Limited told investors in a note.
African markets
In a note released, CardinalStone Partners said the African hard currency bond market reversed the losses recorded at the start of the year, defying the higher-for-longer interest rate expectations – a consequence of the stronger-than-expected inflation readings and buoyant labour market.
“We attribute the impressive outing of African bonds to improving investors’ sentiments in heavy-weighted countries. Specifically, Egypt led the rally in February 2024, as the country unlocked over $35.0 billion in investment from the United Arab Emirates (UAE). $15.0 billion of this fund has been received, and the balance of $20.0 billion is expected over the next two months”.
The investment firm stated that closely following Egypt on the ladder is Kenya, which experienced positive market responses to its successful issuance of $1.5 billion in Eurobonds.
Kenya received a cumulative $2.3 billion in external funding between January and February, which cascaded to a 12.0% month-on-month appreciation of the Kenyan shilling in February versus 15.6% in Zambia, which experienced the strongest currency performance in Africa.
Elsewhere, the sustained uptick in Brent prices buoyed interest in the Angolan Eurobond, which combined with positive momentum in other African instruments to drive the S&P Africa U.S. Dollar Sovereign Bond Index up by 6.0% in February from a decline of 2.3% in the prior month. #Nigeria US Dollar Bonds Hit By Selloffs
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