African Eurobond Yields Dip Amid Global Rate Shifts; Nigeria Sees Renewed Demand
African Eurobonds rallied this week as foreign portfolio investors adjusted portfolios in response to global interest rate movements and fluctuations in oil prices.
In the U.S., the Federal Reserve adjusted fed fund rates by 25 basis points three times this year, while the European Central Bank (ECB) maintained steady rates, and the Bank of England adopted a dovish stance.
Economic reforms across Africa also shaped investor sentiment. Ghana led rate cuts with a 1,000-basis-point reduction in 2025, while Nigeria maintained a tight monetary policy with a 27 per cent interest rate against 14.45 per cent inflation. Egypt’s economy faced pressures but attracted strong investment from Qatar and multilateral lenders, supporting growth momentum.
Oil-linked issuers, particularly Nigeria and Angola, recorded strong buying interest, with moderate demand for Egypt, Ghana, and other top African issuers, often carrying elevated risk premiums.
The Nigerian Eurobond market rebounded, with the average yield declining four basis points week on week to 7.10 per cent, down from 7.14 per cent the previous week.
Notable yield declines were recorded in the 16-FEB-2032 (-12 bps), 28-SEP-2033 (-12 bps), and 28-NOV-2027 (-14 bps) maturities, reflecting renewed investor confidence amid reforms and growth expectations, according to Anchoria Securities Limited.
Market activity was influenced by global interest-rate trends, oil price movements, and U.S. economic data. The week opened firm, supported by rallies in the long end of the U.S. Treasury curve, attractive entry levels, and favourable technical conditions boosting emerging market demand. Mid-week, sentiment weakened slightly as oil prices softened, U.S. yields edged higher, and profit-taking emerged.
Towards the week’s end, softer-than-expected U.S. CPI data and stable labour market figures steadied global rates, driving renewed buying interest.
In the UK, the Bank of England cut its policy lending rate by 25 basis points to 3.75 per cent, the lowest since 2022, reflecting easing inflationary pressures and a cooling labour market. UK headline inflation eased to 3.20 per cent year-on-year in November 2025, down from 3.80 per cent in October.
The ECB, meanwhile, kept its main refinancing rate steady at 2.15 per cent, signalling caution on premature rate cuts. This stability reassured markets that potential rate cuts may occur later in 2026, supporting risk appetite without triggering volatility.
Backed by stable oil prices, light positioning, and attractive valuations, the African Eurobond market closed the week on a modest rally, with the average benchmark yield declining by 10 basis points to 7.07 per cent.
Analysts expect sentiment to remain cautiously positive in the near term, driven by bargain-driven demand, easing global yields, and sustained investor appetite, though liquidity may be light during the holiday period.
“We expect sentiment to remain positive in the near term, supported by expectations of easing global yields and sustained investor appetite in Nigerian instruments,” Anchoria Securities Limited said.
