Bloomberg News

Nigerian 2021 Eurobond Yield Declines to Record Low on Oil Price

April 03, 2012

Yields on Nigeria’s dollar- denominated bonds due 2021 declined to the lowest on record on higher oil prices.

The yield on the $500 million of Eurobonds of Africa’s biggest oil producer fell six basis points, or 0.06 percent, to 5.286 percent by 4:24 p.m. in London, the lowest since the debt was first issued in January 2011, according to data compiled by Bloomberg.

Crude oil is trading more than $30 a barrel above the $72 proposed by lawmakers as a benchmark for this year’s budget, raising expectations of higher foreign reserves and a stronger naira. Nigerian benchmark Bonny Light crude has advanced 15 percent this year.

“Several of the African sovereigns continue to benefit from high oil prices,” Stephen Bailey-Smith, a London-based emerging-markets strategist at Standard Bank Group Ltd., wrote in an e-mailed report today.

The naira appreciated 0.1 percent to 157.56 per dollar on the interbank market in Lagos, the commercial capital. The currency of sub-Saharan Africa’s second largest economy has risen 3 percent this year.

Nigeria sold $100 million at a foreign-currency auction yesterday, the central bank said. Borrowing costs of domestic bonds due 2015 fell 12 basis points to 15.13 percent yesterday, according to the Financial Markets Dealers Association website.

“Short-term naira strengthening is likely as a result of large dollar inflows from foreign investors seeking high yielding government securities and dollar supply from government agencies,” Ecobank Transnational Inc. (ETI) analysts, led by Paris- based Paul-Harry Aithnard, wrote in a note to clients today.

Foreign Reserves

The West African nation’s foreign reserves advanced 2.6 percent last month to $35.6 billion as of March 30, according to data compiled by the central bank based in the capital, Abuja.

“This is a welcome increase,” Leon Myburgh and Coura Fall, Johannesburg-based Africa strategists at Citigroup Inc., wrote in an e-mailed note today. “The higher level of dollar supply in the interbank market as foreign investors went into the treasury bill auctions will have contributed to the improved foreign-exchange reserve data.”

Ghana’s cedi fell 0.4 percent to 1.7835 per dollar as of 3:27 p.m. in Accra, the capital. The cedi has lost 8.1 percent of its value this year.

To contact the reporter on this story: Chris Kay in Abuja at

To contact the editor responsible for this story: Stephen Kirkland at

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