Bloomberg News

Nigerian Eurobond Yields Reach Two-Month High on U.S. Recovery

February 12, 2013

Nigeria’s dollar-denominated borrowing costs rose to the highest in more than two months on speculation that a U.S. economic recovery will drive up the global borrowing benchmark rate.

Yields on the west African nation’s Eurobonds due 2021 climbed three basis points to 4.21 percent at 11:39 a.m. in London, the highest since Dec. 4, according to data compiled by Bloomberg.

“Should the U.S. economy recover, U.S. Treasury yields will possibly back up, negatively affecting the 21s,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd., said in an e-mailed reply to questions today. The bank has a smaller allocation to Nigerian bonds than the weighting in benchmark indexes, he said.

U.S. 10-year bond yields remained higher before a report tomorrow that may show retail sales in the world’s biggest economy climbed for a third straight month, damping demand for the relative safety of U.S. debt. President Barack Obama prepares to deliver his State of the Union address today, in which he is expected to highlight plans to boost jobs and bolster growth.

The international bonds of Africa’s biggest oil producer declined 203 basis points, or 2.03 percentage points, last year as crude prices stayed above the West African nation’s $72 a barrel benchmark, boosting foreign-currency reserves 34 percent to $44 billion by year end.

The naira was little changed at 157.3 a dollar in Lagos, the commercial capital. Yields on the nation’s domestic debt due 2022 fell four basis points to 10.88 percent, according to yesterday’s prices on the Financial Markets Dealers Association website.

Ghana’s cedi rose less than 0.1 percent to 1.9 per dollar in Accra, the capital.

To contact the reporter on this story: Chris Kay in Abuja at ckay5@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net


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