Morgan Stanley turns bullish on Nigeria, expects fiscal and market reforms under Tinubu
Morgan Stanley has turned “bullish” on Nigeria’s government bonds on Thursday on hopes the declared victor in the country’s presidential elections, reports Reuters.
It expects Bola Tinubu to speedily press on with key fiscal and financial market improvements.
“In the short-to-medium term we think that there are potential positive triggers,” the Wall Street bank’s main analyst for the country, Neville Mandimika, wrote in a note, entitled, “As the dust settles, we turn bullish.”
Tinubu, whose victory in Saturday’s election with 37 percent of the vote is being challenged by rivals in court, made a number of pledges on reforms during his election campaign.
Read also: What Tinubu’s presidency means for the economy
Morgan Stanley said positive triggers could include signals that costly fuel subsidies will start to be phased out, a much-anticipated oil refinery will get up and running this year and that the country’s multiple exchange rates will be addressed.
That could push up bond prices and mean the “spread” – banker speak for the premium emerging market governments have to pay to borrow compared to the United States – could come down.
Mandimika said the bank’s preference would be to buy Nigeria’s February 2032-maturing bond versus one of Egypt’s 2029 bonds. “We move the sovereign from neutral to a like stance,” he added.
Despite these catalysts, he cautioned that the longer-term fiscal trajectory in Nigeria, Africa’s la