Nigeria’s Eurobond market is experiencing significant sell-offs as investors react to recent threats from U.S. President Donald Trump. He warned of possible military action in Nigeria unless the government addresses the killings of Christians by Islamist militants. Following this announcement, the average yield on Nigeria’s 14 existing Eurobonds increased to 8.17%, up from 8.28%, indicating rising investor concern.
Gbolahan Ologunro, a portfolio manager at FBNQuest, explained that the sell-off is driven by heightened political risks, a general risk-averse sentiment among international investors, and profit-taking. The market’s reaction aligns with trends seen in the U.S. stock market, where bearish sentiments often lead to similar movements in Eurobonds. As a result, investors are withdrawing from Nigerian bonds, reflecting their anxiety over the country’s political stability.
Despite the current turmoil, analysts suggest that Nigeria’s Eurobond issuance, worth approximately $2.3 billion, may still go ahead as planned. The government’s goal is to align the new bonds’ pricing with existing yields, which range from 6.8% to 9.3%. However, the recent market fluctuations pose challenges for raising fresh Eurobonds, as investor confidence remains shaky.
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