Nigeria’s Eurobond rally shows anyone but Buhari will do

Nigeria’s Eurobonds have made a swift turnaround from some of the world’s worst performers to post the best gains in emerging markets after critical elections that would usher out President Muhammadu Buhari held February 25.

Although less than half of the election results have been published, it is clearer to foreign investors that Buhari will be succeeded by one of Bola Tinubu of the ruling All Progressives Congress (APC), who is in the lead, Atiku Abubakar of the main opposition party, PDP and pre-election polls favourite, Peter Obi of the Labour party.

All three candidates vowed to push through critical reforms if elected, whether it is the removal of the controversial petrol subsidy practice that has emptied the country’s coffers, or a curious foreign exchange policy that has blocked foreign investment.

The three men vying for Buhari’s job are also considered an upgrade on the 80-year-old.

“The Eurobond rally is proof that anyone but Buhari will do,” one foreign portfolio fund manager said. “Nigeria is long overdue for some reforms that Buhari resisted for eight years.”

Five of Nigeria’s dollar bonds ranked among the 10 best performers on Monday in a Bloomberg index of 71 emerging and frontier nations. The country’s risk premium also narrowed the most this year, according to JP Morgan Chase & Co. data.

Nigeria’s bond due 2047 rose 1.8 cents on the dollar to 68.8, cutting its yield by 33 basis points to 11.5 percent.

Details later…