Yields on Nigeria’s $500 million of dollar bonds fell for a seventh day, reaching a record low, after gains in crude prices and as investors favored the nation’s lower debt burden.
Borrowing costs on Eurobonds due 2021 declined five basis points, or 0.05 percentage point, to 5.2 percent as of 3:32 p.m. in London, the lowest since their issue in January 2011, according to data compiled by Bloomberg.
Oil, the key export of Africa’s biggest producer, climbed to the highest level in more than two months in New York after better-than-estimated corporate earnings bolstered optimism that the economy will expand. Brent surpassed $110 a barrel for the first time since May. While Nigeria’s total domestic debt rose 17 percent to $38 billion at the end of June, from a year earlier, the burden is still light, amounting to 16.5 percent of 2011 gross domestic product, said Gregory Kronsten, the head of economic research at FBN Capital Ltd.
The oil price is supportive and “people want something where there’s a good external balance sheet,” Kronsten said in a phone interview from London today. “There’s a shortage value,” as they’ve only done one Eurobond offer, he said.
Nigeria’s total external debt was $6.04 billion as of June 30, according to the country’s Debt Management Office.
The naira was little changed at 161.65 a dollar in Lagos, the commercial capital. Yields on the West African nation’s four percent domestic debt due 2015 fell 11 basis points to 15.68 percent, according to yesterday’s prices on the Financial Markets Dealers Association website.
Ghana’s cedi rose 0.1 percent to 1.9555 a dollar in Accra, the capital.