The nation’s Debt Management office (DMO), on Thursday said it had issued more bonds than originally planned at an auction after slowing inflation rate helped it offer debt at lower yields.
Just this week, the National Bureau of statistics (NBS) revealed that headline inflation rate dropped to 17.78 per cent in February, 0.94 per cent below 18.72 per cent in January this year on the backdrop of slower rise in food and non-food prices.
The debt office, also said it raised 160 billion naira ($509m) at an auction on Wednesday, 30 billion naira more than it had offered to sell.
Nigeria’s inflation slowed to 17.78 percent in February, its lowest level in 15 months.
The government has been selling bonds below inflation in recent months to curb borrowing costs as it intends to fund half of this year’s forecast budget deficit of 2.36 trillion naira ($7.50 bln) through the domestic debt market.
An 80 billion naira bond due 2036 was sold at 16.28 percent against 16.77 percent at its last sale, while a 2021 debt was issued at 16.24 percent against 16.55 percent previously to fetch 30 billion naira.
Another 50 billion naira due in 2027 was issued at par at 16.28 percent.
Total demand at the auction stood at 216.38 billion naira compared with 337.03 billion naira at last month’s sale.
Nigeria issues domestic bonds every month to raise money to fund its deficit, which also helps the banking system manage its liquidity.
In the same direction, the Central Bank of Nigeria (CBN) yesterday sold more treasury bills than originally planned at an auction after it lured demand for one-year debt with yields above inflation.
The bank raised 253.8 billion naira at an auction on Wednesday, 40 billion naira more than it had offered to sell.
It offered the one-year bill at 18.55 percent to raise 166.3 billion naira, against a yield of 18.49 percent at its last auction and higher than February’s inflation rate of 17.78 percent.
The central bank has been selling bills with yields below inflation in recent months to curb borrowing costs as it aims to fund half of this year’s forecast budget deficit of 2.36 trillion naira ($7.50bn) through the domestic debt market.
Yields on the six-month bill were unchanged from the last sale at 17.20 percent to fetch 48.5 billion naira, while a 39.0 billion naira bill due in three month was sold 13.60 percent against 13.65 percent previously.
Total demand stood at 216.38 billion naira against 312.44 billion naira at the last sale.