Nigerian Bonds Gain After Buhari Wins Presidential Election

• Nigerian Bonds Gain After Buhari Wins Presidential Election

Nigeria’s dollar-denominated bonds rallied on Wednesday following the declaration of President Buhari as the winner of the just concluded presidential election.

The dollar-denominated bonds, with more international investors, gained 1.2 per cent in the dollar, to extend a rally of more than 10 cents since the start of the year.

However, benchmark 2028 local bond yield declined from 14.75 per cent on February 22nd to 14.3 per cent on February 27, the lowest in six months.

During debt auction on Wednesday, investors subscription for a one year bill was 610.9 billion naira ($2 billion), 10 times more than the amount the government offered at 14.37 per cent.

Citi analysts, in a note, said that the result could boost naira assets. They were positive on 2028 local bond and 2047 dollar bond.

“Nigerian spreads look fundamentally cheap according to our emerging market sovereign spread model,” they said.

Markets expect Buhari to keep the country’s foreign exchange regime, and while investors are pricing in relatively low growth, the continuity brings a degree of predictability.

“The status quo means that you keep the FX regime intact and as long as oil prices remain north of $60 a barrel, Nigeria remains an attractive carry trade and that is what is going to drive further inflows into the local market,” said Kevin Daly, a fund manager at Aberdeen Standard Investments.