Business
Kenya Offers Escape Route for Nigeria Bond Market Woes
Currency Outperformed
“The currency has definitely outperformed Nigeria’s,” Kaan Nazli, a senior economist at Neuberger Berman Europe Ltd. in The Hague, said by phone on March 9. “It’s helped Kenya.”
Yields on Nigeria’s US$500 million of bonds due July 2023, rated three levels below investment grade by Moody’s Investors Service, climbed 92 basis points in the past year to 6.98 percent by 10:28 am in Lagos (5:28 am EDT). Yields on Kenya’s US$2 billion of debt due June 2024, rated one level lower, dropped 19 basis points since a sale in June to 6.41 percent.
The yield divergence will continue at least until after Nigeria’s presidential election on March 28 and as long as oil prices stay low, according to Marco Ruijer, who helps manage US$7 billion of emerging-market debt at ING Investment Management BV.
The conflict with Boko Haram in northern Nigeria, which claimed at least 1,600 lives in January and more than 4,700 in 2014, led officials to delay national elections scheduled for February 14 by six weeks. The vote is set to be the most closely contested since the end of military rule in 1999.
“There is a lot of political turmoil in Nigeria and it is trading almost one-for-one with oil prices,” Ruijer said. “If oil remains around US$60 a barrel, then Kenya will trade inside Nigeria. If prices rise to US$70 or US$80, that gap should disappear.”
