Given that Nigeria’s upcoming Eurobond issuance would reduce the pressure on domestic borrowing, local bond yields in the country are likely to continue their downward trend in the coming months, analysts at Comercio Partners Asset Management have said.
The analysts, who made this prediction in a report obtained by New Telegraph yesterday, however, said they expected sentiment in the Eurobond market to remain fragile due to the resurgence in COVID-19 cases.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said in a Bloomberg TV interview last Tuesday that Nigeria would raise about $3 billion selling Eurobonds in the second week of October, adding that the roadshow for the sale will start on October 11.
The minister, who noted that the Federal Government had received approval from the National Assembly to raise $6.1 billion from overseas, said: “We are looking at doing half of that in the Eurobond market and the other half from bilateral and multilateral sources.” She added that “depending on how the market goes, maybe we can do a little bit more.”
According to the Comercio Partners Asset Management analysts, expected dollar inflow from the Eurobond issuance will help to ease pressure in the foreign exchange market.
As the analysts put it, “in the local bond market, we expect yields to continue its downward trend in coming months, as we expect the anticipated Eurobond issuance to ease the pressure on domestic borrowing.
However, we expect sentiment in the Eurobond market to remain fragile as the resurgence in covid-19 cases continues to dampen global economic growth.