Nigeria’s Eurobond average yield rises to 19.54% amid inflation slowdown. Demand for local bonds grows, but bearish sentiment dominates the Eurobond market with sell-offs. Concerns over weaker economic data contribute to the instability. US investors prepare for downturns while the Federal Reserve adopts a cautious rate-cut strategy.
The average yield on Nigeria’s US dollar bonds has increased by 12 basis points, reaching 19.54% as of the latest trading in the international market. This rise aligns with a slowdown in headline inflation, indicating improving macroeconomic figures. The naira has also shown some stability, supported by interventions from the monetary authority.
Despite improved conditions, demand for local bonds remains strong as yields stay high. Analysts predict a potential shift in market dynamics could lead to yield repricing before the upcoming March auction. However, bearish sentiment continues to influence the Eurobond market, with African sovereign assets under selling pressure.
Nigerian Eurobonds experienced selloffs across various maturities due to reactions from foreign portfolio investors to a decline in headline inflation to 23.18%. Continuous selling pressured prices lower amid market uncertainty, pushing participants to await clearer indicators of global risk appetite.
Concerns regarding weaker-than-expected sales data have heightened fears about economic momentum, influencing demand for safe-haven assets. Consequently, the average mid-yield for Nigerian bonds increased as traders adjusted their holdings across different maturities, notably impacting the Nov-27 and Mar-29 Eurobond yields.
Investors in US bonds are also preparing for an economic downturn by reducing risky exposures while extending durations in their fixed-income portfolios. Analysts suggest that the Federal Reserve is likely to maintain its cautious stance regarding interest rate cuts, seeking further clarity on economic policies before making significant adjustments.
In summary, the average yield on Nigeria’s Eurobonds has climbed to 19.54%, attributed to a slowdown in inflation and the naira’s stabilization. Despite rising local bond demand, the prevailing bearish sentiment impacts market confidence. Observations suggest continued sell-offs driven by foreign investment reactions and broader economic concerns. Additionally, US bond investors are adjusting their strategies influenced by Fed policies regarding interest rates.
Original Source: dmarketforces.com
