Nigeria Eurobond Yields Rise to Two-Week High as Oil Retreats

April 10 (Bloomberg) -- Nigeria’s Eurobond yields rose to the highest in more than two weeks as the price of oil, the country’s main export, retreated.

Borrowing costs on the West African nation’s $500 million of dollar bonds rose six basis points, or 0.06 percent, to 5.464 percent as of 4:13 p.m. in London, the highest since March 23. The currency of Africa’s biggest oil producer slid less than 0.1 percent to 157.67 per dollar.

Crude fell on projections that U.S. stockpiles rose to the highest level for this time of year since 1990 and a decline in Chinese oil imports.

“Nigeria remains extremely dependent on oil-related revenue for its fiscal earnings,” Razia Khan, regional head of research for Africa at Standard Chartered Plc, wrote in a report today.

Yields on domestic 2019 bonds fell eight basis points to 15.21 percent, according to April 5 prices on the Financial Markets Dealers Association website.

The naira has gained 2.9 percent against the dollar this year, according to data compiled by Bloomberg, as a 12 percent advance in the nation’s benchmark Bonny Light crude has supported the increase in reserves.

Foreign-exchange reserves have risen 9 percent this year to $35.8 billion as of April 4, according to the Central Bank of Nigeria.

Cedi Weakens

Ghana’s cedi dropped 0.9 percent to 1.7925 per dollar, the lowest on record, as of 3:17 p.m. in Accra, the capital.

The Bank of Ghana’s Monetary Policy Committee will decide April 13 whether to change the key interest rate. The Accra-based central bank unexpectedly raised the policy rate for the first time in three years in February, increasing it by 100 basis points to 13.5 percent to bolster a weakening currency.

The cedi, which has slumped 8.5 percent this year, is at risk of heading lower than 1.79 per dollar this week “unless the Bank of Ghana intervenes aggressively to ensure adequate U.S. dollar liquidity,” Celeste Fauconnier and Nema Ramkhelawan-Bhana, Johannesburg-based Africa strategists at Rand Merchant Bank, wrote in an e-mailed note today. “Exchange rate volatility will be a key consideration in the MPC’s decision-making process this week.”

To contact the reporter on this story: Chris Kay in Abuja at ckay5@bloomberg.net

To contact the editor responsible for this story: Stephen Kirkland at skirkland@bloomberg.net