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DMO raises N100bn bonds at higher yields

By on August 16, 2014

The Debt Management Office (DMO) has sold N100 billion worth of bonds with maturities ranging between three and 20 years at an auction that fetched higher yields than previously.

The DMO said yesterday that N15 billion of 3-year debt notes were sold, fetching 11.12 per cent, higher than the 11 per cent they got at the July auction, while N50 billion of 10-year debt was sold at 12.22 per cent against 12.19 percent previously.

A total of N35 billion of the 20-year note was sold at 12.38 percent, compared with 12.14 percent at last month’s auction.

All the debt notes, according to Reuters, were reopening of previous issues, while total demand fell to N174.01 billion, as against 263.91 billion naira last month.

Meanwhile, the Nigerian Interbank Offered Rates (NIBOR) were steady on Wednesday as the market stability reflected lower funding pressure, in addition to anticipated liquidity improvement from treasury bills open market operations.

The inflow of about N134 billion was expected to hit the system yesterday, from treasury bills repayment on 14 August.

The overnight and one-month NIBOR were: 11.79 per cent and 12.75 per cent respectively on Wednesday. The inter-bank secured lending (Open Buy Back) also slowed to 11.46 per cent to underscore market liquidity status. The CBN remained active, supported by its monetary policy stance.

“However, assuming no significant change to key indicators, the monetary policy rate will likely be held at 12 per cent through out the third quarter of 2014 before any cuts are made due to reasonably strong liquidity growth, fiscal expansion prior to the February 2015 elections, and the potential risks to Nigeria arising from the normalisation in US monetary policy,” analysts at Ecobank argued.

The naira appreciated 0.2 per cent against the dollar in the interbank. Recent appreciation continued to reflect increased dollar supply at the CBN’s Retail Dutch Auction System, inflows from oil companies and expected supplies from the NNPC.

Specifically, the naira closed at N161.82 to a dollar at the interbank.

“Meanwhile, demand pressure has risen, and might be heightened at the BDC segment due to supply gap created by the CBN re-capitalisation exercise.

“On a separate note, there are high expectations that the rebased national accounts, in addition to stable forex reserves and CBN’s tight monetary stance, would help support naira,” Ecobank added.

Nigeria’s per capita income had risen by 73 per cent to $2,976, reflecting higher productive base.

 

 

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