New Telegraph

Investors shun naira debt over inflation concerns

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Elevated inflation and dwindling liquidity concerns are keeping investors away from Nigeria’s localcurrency debt, Bloomberg reported yesterday. According to the news agency, naira bonds have lost almost 10 per cent in dollar terms this quarter, extending their year-todate decline to more than 28 per cent, the worst in the Bloomberg Barclays Global Emerging Markets local currency index. That’s almost double the loss for Turkey, the second- worst performer.

It stated that although consumer-price increases slowed in April for the first time in 20 months, the inflation rate in Africa’s biggest economy remains above 18%, adding that even with benchmark 10-year naira yields rising above 13 per cent as the budget deficit widened during the pandemic, “that’s still handing investors a negative real return.” Head of Africa strategy at Standard Chartered Bank, Samir Gadio, was quoted by Bloomberg as saying that “there could be further upside for yields. Pension funds and local investors will probably seek to push yields even higher for now given negative inflation-adjusted rates and the sharp decline in bond maturities in May to June.”

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