Nigeria Equities to Outperform S&P 500 as Eurobond Rally Nears Limit, Renaissance Says

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Nigeria’s Eurobonds may be nearing the limit of their outperformance against US Treasuries, but the country’s equities could still beat the S&P 500 as investors move from pricing out default risk to pricing in a longer-term growth recovery, according to Renaissance Capital Africa.

Nigerian Eurobonds have benefited from tighter credit spreads, higher oil prices and improving sovereign-credit sentiment, while US Treasury yields have climbed on concern about America’s fiscal outlook.

Yet Renaissance argues in a September 03 note to clients that Nigeria’s 2034 Eurobond, yielding about 7%, may no longer offer enough compensation against US long-dated debt if Treasury yields settle in the 5% to 6% range.

The more compelling opportunity, the firm says, is in Nigerian equities—particularly companies with foreign-currency earnings, exposure to credit growth and links to the country’s industrial expansion.

That view, according to Rennaissance, is supported by the prospect of a Dangote Petroleum Refinery listing, improving ratings momentum and the broader argument that the long-term move from developed markets into emerging and frontier markets is still in its early stages.

The Eurobond rally

Nigeria’s 2034 dollar bond yield fell from 7.40% at the start of 2026 to about 7.25% by Aug. 31, even as US 10-year yields rose to 4.75% from 4.17%. The yield spread narrowed from more than 320 basis points to around 250 basis points, a compression of almost one-third.

The narrowing spread reflects a dual repricing. Nigeria has been helped by higher oil prices, following disruption around the Strait of Hormuz, and by the perception that fiscal and exchange-rate reforms are improving its debt outlook. At the same time, markets are assigning a higher risk premium to developed-market fiscal policy,…