Nigeria Eurobond Yields Drop As Investor Optimism Rises

Nigerian Eurobonds are off to a great start in 2025 as investor confidence in the nation strengthens.

Average yields on Nigerian Eurobonds declined for the first time in three weeks, the first time they have declined since the country returned to the Eurobond market last month.

According to analysts at CSL Stockbrokers, this was driven by stronger-than-expected US economic data, including the Initial Jobless Claims–and a rise in the ISM Manufacturing Purchasing Managers Index (PMI).

These factors raised investors’ interests across the eurobonds tenures, causing average yield to decline by 0.18 percent last week to 9.49 percent.

Similarly, analysts at Meristem Securities said that the decline was primarily driven by increased buying interest across the curve, as investors sought higher returns in response to improved market sentiment.

Analysts project that the bullish trend will continue this week.

“We expect the bullish sentiment to persist, though participants may adopt a cautious approach as they reassess global macroeconomic conditions,” analysts at CSL Research said.

On December 2 2024, Nigeria had a successful return to the international bond market after a two year hiatus, with subscription four times the intended offer of $1.7 billion.

The issuance was oversubscribed in excess of $9 billion and the federal government eventually took just $2.2 billion across both bonds.

The federal government sold $700 million worth of the 6.5 year Eurobond maturing in 2031 at a coupon rate of 9.625 percent and $1.5 billion of the 10-year tenure at 10.375 percent.

The week of the new issue saw the average yield across all tenures decline to 9.18 percent from 9.66 percent in the prior week in the secondary market.

This was supported by broad-based buying interest across all maturities by the new issuance in over two years.

By the following week ending December 13, the average yield rose to 9.36 percent percent from 9.18 percent in the prior week.

“ This uptick was driven by profit-taking activities following recent bullish trends, compounded by concerns after a 0.10 percent increase in the US inflation to 2.70 percent, and market anticipation of a potential rate cut at the upcoming Federal Reserve meeting,” analysts at Meristem reported.

Average yields on the foreign bonds increased to 9.64 percent the following week and 9.67 percent by the end of last week in January primarily driven by mild sell-offs across most of the curve.