- The performance of Nigeria’s dollar debt and OPEC’s recent decision to cut oil production is giving seems to be resulting in higher investor confidence, critical ahead of the $1 billion Eurobond Nigeria plans to float this year.
- According to Bloomberg, Nigeria’s U.S. currency-denominated securities drove yields to the lowest in 15 months which resulted in investors reaping returns above the emerging market average this year while Naira bonds were rated as the worst performers.
- The gains of Nigeria’s dollar notes is an indication that investors are comfortable the government has sufficient reserves to cover its foreign obligations which is important, considering FG’s plan to issue $1 billion this year, according to NN Investment Partners in The Hague.
- Boko Haram, Niger-Delta militants and a contracting economy are possible concerns for potential investors but the country’s reserves can soothe any nerves of defaulting. The dollar bonds “could easily be redeemed from existing reserves and are even more easily serviced, at a cost of $91 million annually,” according to Alan Cameron, an economist in London at Exotix Partners LLP.
- Source: Bloomberg
