Nigeria Raises N160bn Bonds at Yields below Inflation

The Debt Management Office (DMO) on Thursday said Nigeria raised N160 billion in local currency bonds at its second debt auction this year at yields lower than the inflation rate in Africa’s biggest economy.

The debt office had initially wanted to raise N110 billion at the auction but increased the offer due to demand.

Total demand stood at N337.03 billion at Wednesday’s auction, higher than N235.05 billion at its previous sale.

Annual inflation in Nigeria climbed to high of 18.72 per cent in January, its 12th straight monthly rise. The trend was worsened by dollar shortages, which have crippled the import-dependent economy and triggered its first recession in 25 years.

The government is also facing funding challenges brought on by the low price of oil. It expects the budget deficit to widen to N2.36 trillion this year as it tries to spend its way of out of the recession.

More than half of the deficit will be funded through local borrowings, the government has said.

The debt office said it raised N70 billion of the paper maturing in 2036 at 16.77 per cent, lower than 16.99 per cent same instrument fetched at the previous auction and paid 16.61 per cent for the N30 billion raised in the paper maturing in 2026 compared to 16.99 per cent at the previous auction.

It issued N60 billion in the note maturing in 2021 at 16.55 per cent against 16.89 per cent at the previous auction.

Nigerian government issues local currency bonds every month to raise funds to support its spending plan, which also goes to help the banking system manage liquidity.