Nigeria led a bond rally across emerging markets as the price of brent crude rose, fueled by the US escalating pressure against Iran.
Nigeria’s dollar bonds maturing 2033 rose 0.76 cents on the dollar to 100.66 cents as of 15:06 p.m. in London. Its longer-dated notes also gained. Angola’s notes due 2035 climbed over 1 cent to rise to 99.00 cents.
The 10 top performing emerging-market sovereign dollar bonds on Tuesday were all from Africa, with those from Nigeria and Angola, two of the largest oil producers on the continent, leading the gains.
Iran-related geopolitical risks have reintroduced risk premium into oil prices that is supportive for emerging-market exporters, according to Smail Ait-Mahrez, a Dubai-based capital markets professional.
“Higher crude prices ease fiscal pressure and are driving a tactical bid in names like Nigeria and Angola with fixed income the natural entry point,” said Mahrez.
The price of brent crude rose to about $65 Tuesday as the US threatened to impose tariffs on nations that conduct business with Iran. The Middle-East nation, an oil producer, has been rocked by weeks of protests.
Despite the price rise, brent crude will likely fundamentally remain subdued throughout the year, analysts say, which is likely to remain a challenge for EM oil exporters.
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