FG to raise N130.3bn through Treasury bill next week

…set to issue $2.5bn Eurobond November

The Federal Government has concluded all plans to raise a total sum of N130.37 billion worth of Treasury bills at an auction on October 4 (Wednesday), 2017, the Central Bank of Nigeria (CBN) has disclosed.

The CBN plans to offer N28.69bn in three-month paper, N33.49bn in six-month bill; and N68.18bn in one-year note. Results of the auction will be announced on the same day.

Also, the FG hopes to issue a $2.5bn Eurobond by mid-November, the head of the country’s debt agency said on Thursday, the latest in a series of debt sales, as it seeks to fund a record budget for 2017.

That N7.44 trn ($24.36bn) budget is meant to fuel Nigeria’s growth after the economy pulled out of its first downturn in a quarter of a century in the second quarter of 2017.

The planned mid-November issue would complement the $1.5bn raised in Eurobond sales in February and March.

Nigeria now has a treasury bill portfolio worth 3.7 trillion naira, Patience Oniha, the director-general of the Debt Management Office, also said at a conference in Lagos.

Nigeria’s 2017 budget is still being debated by policymakers, despite being signed into law in June.

Earlier this week, the upper house of parliament said it would invite the ministers of finance and budget to speak on “inadequate releases” in the budget; and “the need to expedite releases in order to stimulate the economy.”

But, the Africa’s largest economy, raised N243.7bn at a bond auction on Wednesday, almost double the amount it had initially sought, as local funds and foreign investors piled into longer-term debt to lock in higher returns, traders said.

Nigeria’s borrowing costs have fallen from as high as 18 per cent a few months ago, as inflation has slowed, helping the government raise money to cover a gap in its budget.

The Debt Management Office (DMO) had offered N135bn worth of bonds maturing in 2021, 2027 and 2037, on offer. However, total investor demand stood at N394.8bn, prompting the debt office to increase the size of the offer.

The DMO paid 15.98 per cent for the 2021 bond, 15.90 per cent for the 2027 issue and 15.92 per cent for the 2037 debt.

Consequently, the apex bank has said loosening its policy now would worsen inflation and drive bond yields into negative territory, which could lead to capital flight and hurt the currency. It kept its main interest rate on hold at 14 per cent on Tuesday.

The country plans to borrow both locally and from offshore sources to help fund its budget deficit, which has widened due to lower oil prices slashing government revenues and weakening the naira currency.

Earlier, the debt office said Nigeria’s debut N100bnsovereign Sukuk issue, inaugurated last week, was more than 5.8 per cent oversubscribed, suggesting it may tap this demand more to help narrow the budget gap.

The FG, through its apex bank, issues Treasury bills twice a month to help the government to finance its budget deficit, curb money supply growth and provide an avenue for lenders to manage liquidity.