Nigeria’s Eurobond market closed the week on a positive note, with average yields declining by 17 basis points to 6.78 percent from 6.95 percent, as renewed investor demand lifted prices across maturities.
The drop in yields signals a stronger appetite for Nigerian sovereign debt in the international market, as investors increased purchases of existing bonds, pushing prices higher and borrowing costs lower for the government.
Analysts said buying interest remained firm throughout the week, supported by a combination of improving domestic macroeconomic sentiment, elevated crude oil prices, and easing global geopolitical concerns.
According to a market note from Meristem, sentiment in the Eurobond market remained firmly supportive, with average yields declining by 17 basis points to 6.78 percent.
“All tracked instruments recorded yield compression, led by the 23-Feb-30 bond (-30bps), 21-Jan-31 (-23bps), and 16-Feb-32 (-23bps), reflecting sustained offshore demand and continued appetite for Nigerian sovereign external debt across the curve,” the firm said.
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CSL Stockbrokers also reported a broadly bullish performance in the Nigerian sovereign Eurobond market during the week, noting that yields compressed across the curve amid renewed buying interest from global investors.
The brokerage linked investor sentiment partly to Nigeria’s improving macroeconomic fundamentals, particularly the sustained strength in global crude oil prices and the positive implications for government revenue generation.
“Consequently, the average benchmark yield declined by 16 basis points week-on-week to 6.8 percent,” CSL said.
Analysts say the latest rally also reflects improving risk sentiment across global markets.
Titilayo Daramola, a fixed-income analyst, said investor demand in Nigeria’s Eurobond space was largely driven by easing geopolitical tensions in the Middle East, particularly reports of progress in talks between the United States and Iran.
“For the Eurobond space, it’s majorly tied to the fact that the U.S. and Iran were making progress towards a potential peace agreement. So we see some risk-on sentiment from investors,” Daramola told BusinessDay.
“We hear reports that the U.S. and Iran had reached a tentative agreement to extend their ceasefire and continue negotiations, which is boosting sentiment. So I think that’s what’s driving the demand in that space,” she said.
The development has encouraged investors to move back into risk assets, including frontier-market sovereign debt such as Nigeria’s Eurobonds.
Market watchers say lower yields in the Eurobond market typically indicate stronger demand, as investors are willing to accept lower returns in exchange for holding the securities.
For Nigeria, sustained demand for Eurobonds could improve sentiment around the country’s sovereign credit outlook and potentially support better pricing if authorities seek to raise funds in the international debt market.
The rally also comes as investors continue to monitor oil prices closely, given their importance to Nigeria’s export earnings, fiscal revenues, and external debt repayment capacity.