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Bond Market News
Nigeria’s Dollar Bonds Drop 1.5 Points as Currency Falls
February 1, 2024
Dollar bonds of Nigeria fell by over 1.2 points across the curve alongside the drop seen in its currency, the Naira (NGN). The Naira has fallen 31% this week, triggered by a change in the method for setting its rate to bring it closer to the street-market value. This is part of a broad push by the government to stop managing the exchange rate and unify the two markets. The Central Bank of Nigeria this week, ordered banks in the region to limit their forex exposure to curb risks to the financial system, to improve liquidity. It said that it was concerned about the growth in foreign currency exposures making banks potentially vulnerable to forex and other risks. Banks with excess dollars have to sell them before the deadline of February 1 or face sanction. It said that the net open position limit of foreign currency assets and liabilities “should not exceed 20% short or 0% long of shareholders’ funds unimpeded by losses”.
Nigeria’s 7.375% 2033s were down 1.3 points to 82.42, yielding 10.29%.
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