Nigeria’s stellar return to the Eurobond market this week is a fine, if niche, example of just how little attention financial markets pay to US President Donald Trump’s outbursts, also known as the Trump-always-chickens-out (Taco) trade.
Emerging market debt investors piled into Nigeria’s $2.25bn trade on Wednesday. Orders hit $13bn, a very high number for a high yield sovereign at the best of times.
But Nigeria came to market four days after Trump said he would authorise military intervention in the country if it did not act to stop the killing of Christians.
Investment bankers and issuers would, in normal times, probably elect not to come to market so soon after such a threat.
But a Trump presidency is not normal; his foreign policy is erratic and impulsive, as is much of his other policymaking. Financial markets have learned to live with it, and often ignore what he says — sell the rumour and buy the fact. They act only on his decisions — like with the tariff market crash in April, or with threats to increase tariffs on China a few weeks ago.
Trump’s threat of military intervention Nigeria was so absurd and unrealistic that he might as well not have said it.
But there is still a risk for investors. Although the majority of the time, he does not do what he at first threatens, sometimes he does — and you never know when that will be.
But the fact Nigeria, a sovereign that prices 10 year debt not far off 10%, felt safe enough to price a new Eurobond, and that investors were happy to buy it, shows that the bond market believes it has the measure of Trump.