The high yields on Nigeria’s Eurobonds is making it impractical for the government to raise fresh dollar debt, effectively shutting Africa’s second largest oil producer out of the international capital market.
The country’s latest $1.25 billion bond, which is due in 2029 and was issued at a yield of 8.375 per cent in March, now has a yield of 13.57 per cent. That’s as of Tuesday, according to Bloomberg data.
The bond is also trading at a discount of 22.5 percent, given that the price has fallen from 100 cents to 77.5 cents to a dollar. This implies that an investor who bought the bond when it was issued has lost 22.5 per cent of their money.
Only Tunisia, El-Salvador, Pakistan, Ethiopia, Ghana, Honduras and Kenya Eurobonds have sold off at a faster clip among peer countries this year.
“We are effectively locked out of the Eurobond market for new issues,” a source familiar with the matter said. “If we must issue, it will be priced at 12 to 14 per cent interest, (that’s) junk bond rates at best.”
The yields on existing bonds are usually an indicator of how much it will cost to raise a new Eurobond.
