Comercio: Nigeria to access Eurobond market in Q4’24/Q1’25

Comercio Partners, an investment company, has forecasted that Nigeria will access the Eurobond market towards the end of the fourth quarter of this year or in the first quarter of 2025. The company emphasizes that the performance in the Eurobond market will require delicate balancing, considering the lingering effects of the delayed rate cut by the U.S. Fed and Nigeria's debt burden, which continue to influence investor sentiment. Ifeanyi Ubah, the Head of Investment Research at Comercio Partners, elaborated on these insights during a recent interview on CNBC Africa. Ubah discussed various economic factors affecting Nigeria's financial landscape, including the potential entry point for Nigeria into the Eurobond market and the impact of recent monetary policy decisions on investor sentiments. Here are the key points from the interview: 1. Eurobond Market Outlook: The entry of Nigeria into the Eurobond market has been a topic of discussion, especially as other African countries like Ghana have recently faced challenges with debt restructuring. Ubah mentioned that given the prevailing scenarios, he expects Nigeria to tap into the Eurobond market at lower coupon rates ranging around 9 to 11 percent. These rates are influenced by the anticipation of rate cuts in the fourth quarter of this year and the early quarter of next year. 2. Ripple Effects of Monetary Policy Decisions: The conversation also delved into the ripple effects of recent monetary policy decisions, including the 50 basis points rate cut in Nigeria and the increase in the NPR. Ubah highlighted that while the Central Bank's efforts to maintain a tight monetary policy aim to address inflation and stabilize the currency, they also have implications on borrowing costs, unemployment, and overall economic activities. The delicate balancing act faced by the Central Bank impacts investor sentiments and poses challenges for businesses seeking funding. 3. Economic Predictions and Market Analysis: Ubah shared forecasts indicating that inflation in Nigeria could reach around 40% by the end of the year, driven by recent wage shocks and structural challenges in the economy. The discussion also touched on the commodities market, with insights into gold prices influenced by geopolitical tensions and cocoa price surge due to supply chain disruptions. Additionally, oil price estimates projected a range of $85 to $91 by the second half of this year, considering supply cuts and demand dynamics. In conclusion, the interview provided valuable insights into Nigeria's economic landscape, emphasizing the importance of strategic market entries, cautious monetary policy decisions, and the impact of global factors on local markets. As Nigeria navigates through economic challenges and opportunities, stakeholders will need to adapt to evolving conditions and implement prudent financial strategies to mitigate risks and promote sustainable growth.