FG raises local currency bonds at yields below inflation
Nigeria’s government has raised N214.95 billion ($704.18 million at $1 = N305.25) in local currency bonds at its first auction this year, with the debts sold at yields below galloping inflation, the Debt Management Office said yesterday.
The debt office said it raised a N05.10 billion bond maturing in 2036 at 16.99 percent compared with 16.43 percent at its last sale.
It issued a 2026 bond to fetch N74.90 billion at 16.99 percent as against 16.24 percent last month and sold the 2021 note for N34.95 billion at 16.89 percent compared with 15.99 percent in December.
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.
Though yields were higher than at its last auction in December 2016, the debt office said it received subscription of N235.05 billion for the bonds at the auction held on Wednesday.
Annual inflation in Nigeria climbed to a more than 11-year high of 18.55 percent in December, its eleventh 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 2.36 trillion naira 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.
