Debt Management Office Sells N215bn Bonds at Yields Below Inflation

Nigeria has raised N214.95 billion in local currency bonds at its first auction this year, with the debts sold at yields below galloping inflation, the Debt Management Office said on Thursday.

Though yields were higher than at its last auction in December, the debt office said it received subscription of N235.05 billion for the bonds at the auction held on Wednesday, Reuters reported.

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.

The debt office on Thursday said it raised a 105.10 billion naira 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, the debt office said.

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.