Nigeria Eurobond Yields Reach 3-Month Low as Risk Appetite Grows

Yields on Nigeria’s $500 million of Eurobonds reached the lowest in almost in three months as appetite for riskier assets was boosted on speculation of more global central bank action and oil gained.

Borrowing costs on the international debt of Africa’s biggest oil producer due 2021 fell one basis points, or 0.01 percentage point, to 5.33 percent as of 4:03 p.m. in London, the lowest since May 9, according to data compiled by Bloomberg. Yields have declined 25 basis points since the start of July.

“The modest pickup in the Nigerian Eurobond mirrors the relatively more favorable risk environment over the period,” which is “illustrated by a rebound in the oil price, higher equities and more appetite for risky assets,” Samir Gadio, an emerging-market strategist at Standard Bank Group Ltd., said in e-mailed comments. “Despite the continued uncertainty surrounding the future of the Eurozone, the overall global market positioning has been somewhat more bullish since late June.”

Oil in New York and London advanced in July for its first month since April and March respectively and both gained today. The European Central Bank will announce a policy decision tomorrow after President Mario Draghi last week pledged to do “whatever it takes” to preserve the euro. While the U.S. Federal Reserve’s Open Market Committee refrained from introducing a third round of assets purchases at its June session, Chairman Ben S. Bernanke indicated last month that it’s an option.


The naira fell 0.1 percent to 160.95 a dollar and yields on domestic 7 percent bonds due 2019 fell two basis points to 16.10 percent, according to July 31 prices on the Financial Markets Dealers Association website.

The West African nation sold $250 million at a foreign-currency auction today, with lenders buying the entire amount on sale, according to the Abuja-based Central Bank of Nigeria data on Bloomberg. Dollars were sold from 155.86 naira to 155.92 naira each. The marginal rate, which is also used as the prevailing exchange rate, was 155.86 naira, compared with 155.84 naira at the previous sale on July 30.

“The naira seems to have stabilized in a 160-161 range and is supported at these levels by the resumption of modest capital flows into the fixed income market and foreign exchange sales from oil companies,” said Gadio.

Ghana’s cedi rose 0.1 percent to 1.9541 per dollar in Accra, the capital.

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