FPI Sentiment Reverses on Nigerian Eurobonds as Global Market Conditions Improve

Foreign portfolio investors (FPIs) have renewed their interest in Nigerian Eurobonds following a period of significant sell-offs, as global economic uncertainties that previously triggered offshore asset rotations have begun to subside.

The African Eurobond market experienced a bullish trend this week, supported by strengthening commodity prices and more accommodative signals from major central banks, which have helped alleviate concerns about aggressive monetary tightening policies.

Nigerian Eurobonds rallied consistently throughout the week, with yields decreasing from 10.85% to 10.67% before finally settling at 10.40%, representing a substantial 101 basis point compression week-on-week.

Market analysts observed particularly strong buying interest in Nigerian, Angolan, and Egyptian securities, although Egypt faced some temporary selling pressure midweek due to ongoing fiscal concerns.

Recent geopolitical developments, including statements from U.S. President Donald Trump hinting at potential changes within the Federal Reserve, also influenced market sentiment. Despite the current positive trend, analysts anticipate continued volatility in trading activities as concerns about trade tariffs continue to affect investor confidence.

Notable trading activity occurred in the Jan-31 and Feb-32 papers, which experienced significant price increases. These papers closed with bid/offer quotes of 91.625/92.875 and 85.75/87.00, respectively, showing substantial improvement from the previous week’s quotes of 86.75/88.25 and 80.875/82.375.

Nigeria’s benchmark Bonny Light crude saw a modest 1.95% increase week-on-week, ending at $68.60 per barrel. This gain reflects optimistic projections for oil demand in 2025, as highlighted in recent International Energy Agency commentary.

Despite the positive movement in oil prices, Nigeria’s external reserves continued to decline, with gross foreign exchange reserves dropping by 0.29% week-on-week to $37.89 billion as of Wednesday. This ongoing reduction is primarily attributed to weak foreign exchange inflows, which have restricted the Central Bank’s ability to strengthen its financial buffers.

Global equity markets delivered mixed performances this week, as trade-related developments continued to drive investor behavior. U.S. stocks are poised to end the week lower, with the Dow Jones Industrial Average down 1.4% and the S&P 500 declining 1.6%, reflecting renewed worries about trade tensions following the Trump administration’s decision to implement stricter restrictions on semiconductor exports to China.

In contrast, European markets rebounded from previous losses, with the STOXX Europe gaining 3.9% and the FTSE 100 rising 3.3%, as investors became cautiously optimistic about potential relief from U.S. tariffs. The positive sentiment in Europe was further bolstered by favorable UK inflation data, which registered at 2.6% year-on-year for March, better than the anticipated 2.7%.

Asian markets also performed well, with Japan’s Nikkei 225 advancing 2.4% on promising developments in U.S.-Japan trade discussions. Chinese equities posted gains driven by encouraging economic data and expectations of additional policy support from Beijing to counteract tariff impacts.

Overall, emerging market equities (MSCI EM) rose 1.3%, supported by improved investor confidence in China, while frontier market equities (MSCI FM) finished the week with a 1.6% gain, bolstered by strong performances in Morocco (+6.6%) and modest gains in Romania (+0.4%).