Nigeria Eurobonds Grow After President Tinubu Announces Fuel Subsidy Removal
LAGOS MAY 30TH (NEWSRANGERS)-Nigeria’s sovereign dollar-denominated bonds rose on Tuesday after new President Bola Tinubu said at his swearing in on Monday that a costly fuel subsidy would be removed and the central bank should work towards a unified exchange rate.
Eurobonds were up as much as 1.77 cents in the dollar, with the 2029 maturity rising to 86.15 cents by 0733 GMT . Its yield of 11.72% was the lowest since the end of February.
Tinubu, whose victory is being disputed in court by his main rivals, inherits record debt, foreign exchange and fuel shortages, nearly two-decades-high inflation, poor power supply and falling oil production due to crude theft and underinvestment.
Getting rid of the fuel subsidy, which cost $9.7 billion in 2022, reforming the foreign exchange market so profits can be repatriated and raising tax revenues are all priorities for international investors, many of whom have pulled out of Nigeria in recent years.
“The removal of the fuel subsidy will drive up consumer prices in the near term; however, in the long run, it will help to improve the country’s fiscal and economic dynamics,” ETM Analytics, a South African research firm, said in a note.
Tinubu enacting his election pledges “will underpin investor confidence”, it said.
Reuters
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Posted by News Rangers
on May 30 2023. Filed under National.
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