Nigeria Sells Less Bonds than Planned to Keep Cost below Inflation

Nigeria raised less money than it originally planned through a domestic bond auction on Wednesday after investors demanded higher yields to buy the debt, the Debt Management Office (DMO) said on Thursday.

The DMO said it raised 105.32 billion naira ($335 mln) from the bond sale, 29.7 billion naira less than it wanted to raise.

Traders said investors demanded yields of up to 17.55 percent on the notes but the debt office offered the bonds at yields below 17 percent on an improving inflationary outlook in Africa's biggest economy.

On Thursday, the statistics office said Nigeria's inflation rate eased for the second consecutive month in March to 17.26 percent, down from 17.78 percent in February, which was the first drop in 15 months.

The DMO offered a fresh 20-year bond at par at 16.24 percent coupon to raise 56.25 billion naira. It sold a 10-year debt of 34.04 billion naira at 16.24 percent as against 16.28 percent at its previous sale.

The debt office raised 15.03 billion naira via a five-year debt at 15.98 percent compared with 16.24 percent previously.

The government has been selling bonds below inflation in recent months to keep a lid on debt service cost as it aims to finance half of its 2.36 trillion naira ($7.50 bln) budget deficit for 2017 through the domestic debt market.

myfinancialintelligence.com