Nigeria's Eurobonds Rebound Despite Yields Easing To 7.18% Amid Global Tensions

Nigeria’s Eurobond market closed last week on a positive note, with yields across maturities declining as investor confidence remained largely steady amid recent global uncertainties.

Average yields on Nigeria’s Eurobonds fell by 7 basis points to 7.18 per cent from 7.25 per cent, marking a recovery after three consecutive weeks of bearish performance, according to data from Lagos-based Meristem.

Market participants say the recent movements suggest that investor confidence in Nigeria’s credit story has not significantly deteriorated, even as external shocks continue to influence pricing.

“Investor confidence has largely remained stable,” said Ayodele Makinde, a fixed income analyst, explaining that earlier movements in yields were driven more by external factors, particularly tensions in the Middle East, rather than a shift in Nigeria’s underlying fundamentals.

“The marginal increase in yields since late February suggests that sell-offs have been limited and less aggressive than initially expected,” he added.

The improvement was broad-based, with strong buying interest recorded across key maturities, including the September 2028, March 2029, and February 2032 papers.

The rebound comes after earlier weakness in the week, when yields had edged slightly higher, reflecting cautious investor sentiment amid rising geopolitical tensions.

However, renewed demand towards the end of the week helped reverse those losses, signalling that investors are still willing to take positions in Nigerian sovereign debt despite lingering risks.

Analysts explained that Nigeria’s Eurobonds, like other emerging market assets, remain sensitive to global financial conditions, including movements in U.S. Treasury yields and broader risk sentiment.

“The uptick in Eurobond yields over the last couple of days reflects a broad risk-off response to the tensions in the Middle East,” Omobola Adu, a fixed income analyst at CSL, explained.

As a result, short-term fluctuations in yields are likely to persist, especially in response to geopolitical developments and monetary policy signals from advanced economies.

“We expect this sentiment to persist in the near term, but see room for yield compression once tensions de-escalate,” Adu said

Despite this, the latest recovery indicates that investors are maintaining a cautious but constructive outlook on Nigeria, supported by ongoing economic reforms and expectations of improved macroeconomic stability over time.

The contrast between earlier intra-week weakness and the eventual rebound highlights the recovery’s fragility, with market direction still dependent on both global and domestic factors.

In the near term, analysts expect yields to remain range-bound, with mild volatility as investors continue to reassess risk and respond to evolving global conditions.