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Nigeria’s Eurobond Yields Rise, Reflecting Wider African Market Strain

AnyFans 2025-10-09

By Toyin Akande

Foreign portfolio investors (FPIs) pared back their holdings of Nigeria’s Eurobonds following the recent interest rate cut by the U.S. Federal Reserve, which signaled the start of a potential global monetary easing cycle.

The sell-off drove prices lower across maturities, pushing average yields higher mirroring trends seen among other oil-rich African issuers.

Ghana, Angola and other African issuers saw a spike in their sovereign Eurobonds yield as market begin to weigh the impacts of monetary easing drive on portfolio constructions .

The tone in the Eurobonds market was more reactive, as a wave of sell-offs swept across the curve following fresh policy moves by major central banks.

Rate cuts by the U.S. Federal Reserve and the decision taken by the Bank of England spurred a repositioning play, with investors pricing in the likelihood of further easing later in the year, according to Cowry Asset Limited.

Consequently, average Eurobond yields rose by 12 bps week-on-week to 7.98%, reflecting broad-based selling pressure across maturities.

Last week, African Eurobonds opened the week bullish as investors positioned ahead of the Federal Reserve meeting, with optimism strengthened by ongoing U.S.–China trade talks in Madrid.

According to AIICO Capital, sentiment held firm into midweek despite stronger U.S. data, as markets remained focused on the anticipated Fed cut.

The Fed eventually delivered a 25-bps reduction in benchmark rates, its first in 2025, citing labor market weakness and signaling two more cuts later in the year.

However, Powell’s cautious tone and concerns over Fed independence tempered enthusiasm, leading to mixed-to-bearish trading, AIICO Capital Limited told investors in a note.

U.S Jobless claims offered little clarity, showing a slowdown in hiring even as new filings eased. By Friday, Eurobonds extended losses, though late dovish remarks from Fed officials helped limit declines.

Analysts said the Eurobond market is likely to remain mixed in the near term, even as traders price in a 92% probability of a 25-bps rate cut at the upcoming FOMC meeting on October 28-29.