Weak Sentiments Dampen Eurobonds demand, Local Bonds Rally

By Bonny Amadi

Nigerian Eurobonds suffered weakened demands in the first week of September ended Thursday as investors’ weak sentiment characterised market segments’ market trend in the fixed income space.

However, the Nigerian secondary bond market recorded a bullish performance, buoyed by heightened investor demand across multiple tenor segments.

Investors actively positioned in both short and medium-dated instruments, reflecting improved market sentiment and a shift toward fixed-income assets amid lingering uncertainties in other asset classes.

This broad-based buying interest exerted mild downward pressure on yields, leading to a modest 13 basis-point (0.13%) decline in the average yield, which closed the week at 16.97%.

In contrast to the bullish trend observed in the domestic bond market, the Nigerian sovereign Eurobond segment closed the week on a bearish note, weighed down by weak investor sentiment across the curve.

Selling pressures persisted amid cautious global risk appetite and concerns over external macroeconomic headwinds, particularly from rising U.S. Treasury yields and a stronger dollar.

Consequently, average Eurobond yields climbed by 5 basis points week-on-week, settling at 8.01%.

Meanwhile, looking into the new week, domes- tic bond market activity is likely to stay range-bound, supported by steady demand but tempered by possible profit-taking. In the Eurobond space, yields may remain volatile, driven by U.S. Treasury movements, dollar strength, and global risk sentiment.