Morning Commentary: New Nigeria notes trade up in secondary action; emerging markets firm overall

By Rebecca Melvin

New York, Feb. 16 – Nigeria’s newly priced notes traded up upon release for secondary market dealings on Friday after the sovereign priced two tranches of $1.25 billion apiece at yield spreads that were tight compared to guidance and initial price thoughts, market sources said.

Nigeria’s 7.143% notes due 2030 were quoted at 101.55 bid, 101.85 offered at late morning, and the sister tranche, a 7.696% note due 2038, was at 102.75 bid, 103.25 offered, according to a London-based trader.

The order book for the two tranches topped $11 billion for the notes, one source said. And with the cheap pricing, demand was high.

Elsewhere, Egypt’s new tranches did well this past week and were strong on Friday.

Other parts of the Middle East were also faring well and South Africa’s bond curve remained 10 basis points to 12 bps tighter.

There was no pipeline heard in the Central & Eastern Europe, Middle East and Africa region, but it was expected that more stability would bring out supply.

The last week showed an outflow from hard currency emerging market bond funds of $2.66 billion for the week ending Feb. 14. The outflow for local currency emerging market bond funds was $243 million, resulting in a total outflow of $2.86 billion, and the largest outflow since mid-November 2016, according to the EPFR data that was published late Thursday.

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