Offshore Investors Boost Nigeria’s Eurobond Rally Amid Global Rate Cuts
By NaijaEnquirer Staff
Nigeria’s sovereign Eurobonds rallied in the international market this week as offshore investors increased their holdings, encouraged by signs of global monetary easing and firming oil prices.
Impact of Global Monetary Policy
Following last week’s U.S. Federal Reserve interest rate cut, investors have been recalibrating positions across African issuers. Market watchers anticipate other central banks will follow suit, although the European Central Bank paused at its latest meeting.
Domestically, the Central Bank of Nigeria (CBN) also lowered its benchmark interest rate, citing disinflation trends and naira stability, further boosting market sentiment.
Mixed Trading in African Eurobond Market
Analysts noted that African Eurobonds traded on a mixed note midweek, supported by higher oil prices after U.S. crude inventories declined. Nigeria’s short-dated Eurobonds saw price declines, while mid- to long-term maturities recorded modest gains.
According to Cowry Asset Limited, average yields on Nigerian sovereign Eurobonds dropped by three basis points (3 bps) to 7.89%, reflecting growing investor confidence. AIICO Capital added that positive sentiment may continue in the near term if oil prices maintain momentum.
Oil Prices Drive Sentiment
Brent crude gained $2.17, or 3.24%, to $69.14 per barrel, while WTI crude rose $1.41, or 2.22%, to $64.82, reaching a three-week high. The surge followed a surprise drop in U.S. crude inventories and supply disruptions in Iraq, Venezuela, and Russia.
Gold Retreats as Dollar Strengthens
Meanwhile, gold prices retreated as the dollar strengthened. Spot gold slipped 1.23% to $3,717.97/oz, while U.S. gold futures declined 1.21% to $3,750.15/oz, as markets awaited clearer guidance from Federal Reserve Chair Jerome Powell on the timing of future rate cuts.
Outlook
Market analysts expect oil prices to remain supported in the short term by supply constraints, despite potential risks of oversupply in the longer horizon. For Nigeria, stronger oil prices coupled with easing global rates could sustain investor appetite for Eurobond holdings in the coming months.
