Yields on Nigeria’s 2024 bond shed 15 basis points to 11.89 per cent on Friday, after JP Morgan added it to its Government Bond Index-Emerging Market, attracting offshore funds, dealers said.

According to Reuters, the 10-year benchmark bond opened for trade at 12.04 per cent.

Last week, JP Morgan said it added Nigeria’s 2024 bond to its emerging market government bond index, in addition to five other bonds already listed, pushing its yield down 22 bps.

Since then, some investors have taken profits, dealers said.

The addition also lifted overall trading volumes on Friday to around N11.5bn ($70m), compared with an average of around N8bn to N9bn, dealers said.

JP Morgan valued Nigeria’s outstanding bond issues on its index at $13.75bn.

Demand for Nigerian debt to rise

Nigerian bond yields are expected to continue falling due to offshore investor appetite for local debt ahead of Nigeria’s inclusion into JP Morgan’s Government Bond Index.

Meanwhile, demand for Kenyan paper is expected to remain subdued due to the impact of a recent liquidity crunch.

Nigeria’s 2024 bond is due to be added to JP Morgan’s GBI-EM next Thursday, potentially triggering more offshore interest.

“We have seen a couple of (indications of) offshore interest in the 2014 bond today … ahead of the inclusion of the debt notes in the JP Morgan index,” one dealer said.

Traders said yields on the 2024 bond fell to 11.88 per cent on Thursday from 12.04 per cent on Monday.

“It is possible we may see some profit-taking at this level, but this will depend on the level of interest in the debt note in the coming days,” another dealer said.

Demand for Kenyan Treasuries is expected to be subdued at next week’s auction as the market continues to feel the impact of a recent liquidity crunch.

Punch