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Nigeria’s Eurobonds are witnessing renewed interest from foreign investors as global central banks, particularly in emerging markets, begin to cut interest rates. With attractive yields, Nigerian Eurobonds are increasingly seen as a safe haven for foreign portfolio investors (FPIs) seeking competitive returns within the emerging market landscape.
On Wednesday, Nigeria’s sovereign Eurobonds saw significant buying activity across short, mid, and long-term securities, driving the average yield down by 0.07% to 9.54%, according to a note from Cowry Asset Limited. Just a week prior, yields had climbed to around 9.6% due to cautious sentiment tied to disinflation trends, which has since settled as investors adjust portfolios in line with renewed optimism for Nigeria’s economic recovery, despite rising public debt levels.
This bullish momentum in the Nigerian Eurobond market reflects investor confidence, with yields stabilizing below 10% even amid local economic challenges. Analysts from Meristem Securities report that last month’s performance was mixed, as rate hikes by the European Central Bank and U.S. Federal Reserve initially drove yields up to 9.81%. However, a 50 basis point (bps) cut by the U.S. Federal Reserve spurred optimism, attracting additional buying interest in Nigeria’s dollar-denominated bonds and driving yields down to 9.28% by the end of September.
Investor confidence is further supported by improved fiscal management in Nigeria, with inflation cooling over the past two months and a recent 50 bps rate hike aimed at stabilizing the economy. The trend of rate cuts in other emerging markets, including South Africa and Ghana, has also likely bolstered confidence in Nigeria’s bonds, resulting in increased demand and price gains across Nigerian Eurobond instruments through September.
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