Yields on Nigeria’s 10-year bonds have increased by about three per cent in the past two weeks as investors sell-off their securities in anticipation that major central banks may start backing off policies that have flooded markets with cash.
According to Reuters, the 10-year bond, which is listed on the JP Morgan Emerging Market Government Bond Index, traded at 14.7 per cent on Wednesday, compared to the 11.8 per cent on May 30.
“Foreign investors are dumping bonds,” one dealer told Reuters, adding that bond prices shed N11 in one week.
The dealer said the sell-off had hurt the naira and panicked domestic funds, adding that it had triggered a shift to stocks which have gained over 40 per cent so far this year. Demand for Nigerian assets has been hurt by “weak data from China signalling a slowdown for emerging markets and the risk that the United States could reverse its stimulus earlier than previously thought,” Standard Chartered Bank’s Head of Research for Africa, Razia Khan said.