Yields on Nigerian Eurobonds dipped to the lowest level in two months last week as a rally in oil prices lifts investor sentiments.
Average yields slid to 8.65 percent last week, according to data compiled by BusinessDay.
The last time yields were in this region was the last week in March when yields were 8.79 percent, before the global tariff crisis.
The Nigerian Eurobond market took a blow from the global tariff crises causing the average yields to hit as high as 11.37 percent in April.
The Eurobonds that recorded the biggest compression in yields include those maturing in November 2025 (-118bps), November 2028 (-46bps) and September 2028 (-32bps). There’s an inverse relationship between bond yields and prices such that lower yields are a signal of increased demand.
Analysts from Meristem Securities said that the Eurobond market reflected investors’ confidence in Nigeria’s economy, with the naira finding renewed stability and inflation starting to cool.
Read also: Nigerian banks must repay $2.35 billion in Eurobonds by 2026-end
Nigeria’s headline inflation rate eased slightly to 22.97 percent in May 2025, marking the second consecutive monthly decline from 23.71 percent in April and 24.23 percent in March 2025.
On a year-on-year basis, May 2025’s inflation rate is significantly lower than the 33.95 percent recorded in May 2024, though this notable drop is partly attributed to the rebasing of the Consumer Price Index (CPI) by the NBS in January 2025, which adjusted the inflation basket and base year.
Brent stood at $76.83 per barrel on Monday, with WTI Crude selling at $73.62 per barrel. The price of Nigeria’s flagship crude oil grade, Bonny Light, was $78.62 per barrel at the same time.
Similarly, analysts at CSL Stockbrokers also mentioned that a mix of favourable domestic and global macroeconomic factors supports the rising demand for emerging market–including Nigeria’s– Eurobonds.
Lower domestic inflation figures and rising global crude oil prices—driven in part by heightened tensions in the Middle East—contributed to improved investor sentiment.
For Nigeria, Africa’s top oil producer, the further rally in crude offers a welcome lift for foreign exchange (FX) inflows and fiscal revenues.
Analysts say this could help ease near-term pressure on the naira, which has shed some of its value recently, despite a more flexible exchange rate regime introduced earlier this year.
“For us, escalation means that oil prices will now flirt at $100 a barrel,” said Ikemesit Effiong, partner at SBM Intelligence.
“The naira will strengthen a little bit against major currencies largely because those currencies will soften as the uncertainty of an Iranian reaction against US assets heightens.”
Although the U.S. The Federal Reserve held rates steady, dampening expectations for near-term rate cuts, but the market still saw gains across the curve.
While the Fed acknowledged some inflation cooling, its updated economic projections signal a cautious outlook. Policymakers now anticipate two rate cuts later in 2025, an increase from their prior forecast, but simultaneously raised their core personal consumption expenditures (PCE) inflation forecast to 3.0 percent by year-end, partly due to expected tariff impacts.
