Nigerian Bonds Jump to Four-Month High After Buhari Election Win

Nigerian bonds rose to the highest in almost four months, while the country’s stocks were poised to extend gains, after former military ruler Muhammadu Buhari defeated President Goodluck Jonathan in a largely peaceful vote.

The African nation’s $500 million of Eurobonds due in July 2023 advanced for the 11th day, pushing the yield down 19 basis points to 6.01 percent by 8:46 a.m. in Lagos. The Nigerian Stock Exchange All Share Index jumped 2.1 percent on Tuesday, its longest winning streak in more than a month, amid speculation the leadership transition won’t be fraught with violence.

“We’re actually going to see the market go up” with a Buhari victory, Sven Richter, who oversees more than $260 million as the Johannesburg-based head of frontier markets at Renaissance Asset Management, said by phone on Tuesday. “The market’s been waiting to see a free and trouble-free election.”

Jonathan, who lost in the first defeat of an incumbent since Nigeria gained independence from the U.K. in 1960, sent his “best wishes” to Buhari after the vote, bolstering investor confidence as the country contends with a six-year-old war against the Islamist militant group Boko Haram. Nigerian equities trade at 8.7 times projected 12-month earnings, compared with a multiple of 10 for the MSCI Frontier Markets Index.

“The Nigerian equity market is cheap and part of this cheapness is because the risk premium is high,” Ayodele Salami, the chief investment officer at Duet Asset Management Ltd. in London, said by phone on Tuesday. “The absence of post-election violence will probably give a lot of investors at least some more confidence to start coming back to Nigeria.”

A retired general who lost three previous elections, Buhari pledged on the campaign trail to clamp down on corruption, boost average annual growth to 10 percent and create at least 1 million jobs a year. He won 52.4 percent of votes cast in all 36 states and the Federal Capital Territory in Africa’s biggest oil producer, according to tallies by the electoral authorities.