Nigeria bonds, naira rally after central bank governor gets second term nomination

Increase buying of domestic bond spurred a decline in yields on Friday following the news of reappointment of Godwin Emefiele for a second term of five years as the Central Bank of Nigeria (CBN) Governor, dealers said on Friday.

Fixed income dealers said bond yields fell across maturities on Friday as buying pressure from fund managers escalate in response to an expectation of sustainability of the current CBN monetary policy.
President Muhammadu Buhari has nominated Emefiele for another term in a letter he sent to Senate on Thursday. The parliament is expected to confirm the nomination before its dissolution in June.
“Emefiele’s re-appointment has provided support for a rally that started on the bond market this week. Offshore buyers have welcomed the re-appointment,” one trader at the Nigerian unit of an international bank said.
Local asset managers and insurance companies accounted for much of the bond buying, traders said, with foreigners in the mix.
Analysts have said that Emefiele’s return could be supportive for bonds as investors hunt for yields on the debt market while equity players worry about slow growth, expecting sentiment to remain weak for stocks.
The benchmark 2028 bond yield fell to 14.20 percent on Friday, down from 14.36 percent the previous day while the naira, which has been trading tightly firmed to 360 per dollar after the nomination, traders said.