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FG sells N60bn bonds at lower yields

By on May 16, 2015

The Federal Government sold bonds worth N60bn at lower yields on all tenors at an auction on Wednesday, the Debt Management Office said on Thursday.

The debt office said in a statement that investors submitted total bids of N183.34bn compared with N184.72bn at the previous auction.

Reuters reported that the lower yields reflected the trend in the secondary market, which remains below 14 per cent following a sharp rise after the general elections in March.

The five-year, 10-year and 20-year tenors each received a total of N20bn, the debt office said.

The five-year paper was sold at 13.84 per cent, lower than 14.44 per cent the debt attracted at the last month’s auction.

The 10-year bond fetched a yield of 13.48 per cent against 14.22 per cent last month, while the 20-year debt attracted a yield of 13.88 per cent compared with 14.45 per cent last month.

Meanwhile, the naira is seen stable due to restrictions set by the Central Bank of Nigeria on the foreign exchange market since February.

The naira traded at 198.5 to the dollar on Thursday compared with the 197-199 range in the previous week.

Traders said dollar sales by some oil multinational, including the Nigerian National Petroleum Corporation provided liquidity in the market.

The CBN’s Monetary Policy Committee is due to meet on May 19 but forex dealers said there might be no reprieve due to the prevailing tight control in the forex market, which has restricted access to dollar by importers.

Kenya’s shilling and Ghana’s cedi could weaken next week on increased dollar demand, while Zambia’s currency is seen strengthening further on dollar inflows chasing government debt.

An expected surge in dollar demand by importers could weaken the shilling next week, after the currency traded stronger following a central bank sale of dollars on Tuesday.

The Ghana cedi hit a record low on Wednesday and could remain under pressure on strong dollar demand, traders said.

“The reason is simple, supply is weak while demand is strong,” said a trader for Barclays Bank Ghana, Mr. Michael Akpakli.

The Bank of Ghana surprised markets by raising the benchmark interest rate by 100 bps to 22.0 per cent in part to slow the cedi’s decline, Governor Henry Kofi Wampah said.