Nigeria’s Eurobond yields hit 4-year low as oil rally, global cues boost demand

NIGERIA’s sovereign Eurobond market extended its rally last week, with average yields falling to 6.95 percent, the lowest level in four years, amid strong investor demand, rising crude oil prices and shifting global macroeconomic signals.

Heavy buy-side interest dominated trading across most maturities, compressing yields as investors rotated into higher-yielding emerging market assets. Analysts at CSL said the market remained largely bullish throughout the week, supported by improved global risk sentiment and firmer oil prices.

According to CSL, the average benchmark yield declined by 6 basis points week-on-week to 6.95 percent, reflecting sustained appetite for Nigeria’s dollar-denominated debt. The firm attributed the performance to a blend of favourable domestic indicators and supportive external conditions.

At the domestic level, Nigeria’s inflation rate moderated to 15.10 percent in January, easing concerns about macroeconomic instability and reinforcing confidence in the country’s policy direction. The softer inflation print signalled improving price stability, a key consideration for foreign portfolio investors assessing risk-adjusted returns.

Externally, crude oil prices strengthened on the back of heightened geopolitical tensions in the Middle East. Renewed concerns over possible U.S. military action against Iran injected volatility into energy markets, pushing prices higher and improving the outlook for oil-exporting economies such as Nigeria.

As Africa’s leading crude producer, Nigeria stands to benefit significantly from any sustained rally in oil prices. Higher crude prices typically translate into stronger foreign exchange inflows, improved fiscal revenues and enhanced capacity to meet external debt obligations – all factors that support sovereign bond valuations.

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Analysts at AIICO echoed similar sentiments, according to BusinessDay, noting that the Eurobond rally was driven by a combination of macroeconomic data releases, oil price swings and geopolitical developments. The firm said uncertainty surrounding U.S.-Iran relations heightened risk sensitivity in global markets, indirectly boosting oil-linked assets.

Tensions escalated last week despite diplomatic talks in Oman, with both sides remaining at an impasse. U.S. President Donald Trump intensified pressure on the Iranian government following a crackdown on anti-government protesters, further stoking concerns about potential supply disruptions in the oil market.

As a result, oil prices are expected to remain volatile, with sharp two-way swings likely to be influenced more by diplomatic signals and political rhetoric than by pure supply-demand fundamentals.

Meanwhile, analysts at Citigroup indicated that if disruptions to Russian oil supply keep Brent crude trading within a $65 to $70 per barrel range in the months ahead, the OPEC+ alliance could respond by raising production from its spare capacity to stabilise prices.

Market movements during the week reflected these crosscurrents. Trading opened on a firm note as stronger crude prices triggered renewed demand for Nigeria’s Eurobonds, pushing benchmark yields down by three basis points early in the week.

By midweek, however, some investors locked in gains, leading to a modest uptick in yields on selected maturities. The shift followed the release of U.S. labour market data showing that unemployment fell to 4.3 percent in January from 4.4 percent in December. The tighter labour reading suggested continued resilience in the U.S. economy, reinforcing expectations of a cautious monetary policy stance by the Federal Reserve.

Toward the end of the week, sentiment turned positive again as investors reacted to mixed U.S. jobless claims data and softer inflation figures. The January U.S. Consumer Price Index came in at 2.4 percent, below the 2.5 percent estimate and down from 2.7 percent recorded in December 2025. The lower inflation reading eased concerns about aggressive rate tightening and supported demand for emerging market debt.

By week’s end, Nigeria’s Eurobond market remained firmly bullish, with yields anchored at multi-year lows. Analysts say the trajectory of oil prices, global monetary policy signals and geopolitical developments will continue to shape investor positioning in the near term.

For now, the convergence of easing domestic inflation, stronger crude prices and favourable global cues has positioned Nigeria’s Eurobonds as attractive instruments in emerging market portfolios, sustaining momentum in the sovereign debt market despite lingering global uncertainties.