Investors sell off Nigeria dollar bonds over ongoing protests
TLDR
- Nigeria's dollar bonds faced significant sell-offs on Monday amid uncertainty over the impact of ongoing nationwide protests on the government's economic plans.
- President Bola Ahmed Tinubu's appeal for suspension and dialogue did not halt the protests, leading to a widening spread between Nigerian dollar debt and US Treasuries by 46 basis points to 715, the largest increase since March 2023.
- Five of Nigeria's Eurobonds ranked as the worst performers in a Bloomberg index of emerging and frontier sovereign debt, reflecting the negative impact of the protests on the country's bond market.
Nigeria’s dollar bonds experienced significant sell-offs on Monday, marking the worst day in 17 months as investors grappled with uncertainty over whether the government’s economic plans will be impacted by ongoing nationwide protests.
The protests, which began last Thursday, persisted into Monday despite President Bola Tinubu’s appeal for suspension and a call for dialogue. The spread between Nigerian dollar debt and US Treasuries widened by 46 basis points to 715, per JPMorganChase, marking the largest single-day increase since March 2023.
Further analysis indicated that five of Nigeria’s Eurobonds were among the worst performers in a Bloomberg index of emerging and frontier sovereign debt.
Key Takeaways
Last year, foreign investors applauded President Bola Ahmed Tinubu for implementing bold reforms such as the removal of the fuel subsidy and the unification of the naira. However, recently, tens of thousands of young Nigerians have staged #EndBadGovernanceinNigeria protests across the nation to demonstrate against the cost-of-living crisis. They are advocating for a reduction in the cost of food, the removal of the fuel subsidy, as well as a reduction in insecurity and the cost of governance. The protests, which were scheduled to last for 10 days, began across major cities in the country on Thursday. While the intensity has abated in some parts of the country, the demonstrations continue to pose a significant challenge to the government.
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