Nigeria records 25% yields from local currency bond sale 

Reports emerging from the Debt Management Office (DMO) says Nigeria plans to raise $312.50 million (about N95bn) as its last auction bond market recorded about 25 per cent less yields than anticipated.

 The DMO in its report of the deal, made available to Ripples Nigeria, indicates that three-ranged local currency bonds were offered for the market reflecting those of: 2021, 2026 and 2036. in local currency.

 Contrary to expectations, only the first two received above average patronage, while the last recorded below average, thereby reducing anticipatory yields in cumulative turnover by between 22 to 25 percent, according to the data from the statistics unit of DMO.

 The debt office had said it wanted to offer N10 billion of 2021 paper at 15.29 percent at the auction, compared with 15.14 percent at the previous auction last month, but only agreed to sell the N35bn bond for an eight-year duration with a higher percentage return.

 But all of that did not impress investors, who were said to have demanded yields ranging between 12-17 percent for all the debts.

 However, the debt office was forced to accept between 10-15 percent, a situation that contributed to the low yield at the close of business for October.

 According to experts, the implication of this is that government will have to continue to look elsewhere to raise funds with which to run its 2016 budget, saddled with about $2.2 billion deficit.

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 “When Indonesia was in the same situation, it removed tax on foreign investors that were not ready to repatriate cash back to their home countries for five years. And today, most of those young outfits are big companies exporting goods and services abroad and making more foreign exchange reserves that the country could have made if it had borrowed,” he said.

 Both the CBN and DMO, in collaboration with the Ministry of Finance have been having running battle over how best to generate funds for the budget, which recession has worsened, when compared with how budgets of past years were implemented.

 As at date Nigeria has concluded plans to borrow $1bn from the AfDB and is still looking for yet another $1.2bn from other sources, including the IMF/World Bank, European Union and internal sources.