Nigeria raises NGN 55bn from domestic bond auction, in line with target

By bne IntelliNews July 18, 2013

Nigeria sold NGN 55bn (EUR 260mn) in 2015 and 2030 government bonds at an auction on July 17 matching its previously announced target, data from the country’s Debt Management Office (DMO) showed. All notes are re-openings of previous issues.

DMO sold NGN 20bn of the 4% coupon bond, maturing on April 23, 2015, at a yield of 13.45%, up from 12.25% at the previous auction of the issue on June 12. The issue attracted bids worth NGN 52.67bn, setting the bid to cover ratio at 2.63.

The office sold NGN 35bn of the 10% issue, maturing on July 23, 2030, at a yield of 13.79%, up from 13.5% in June. Bids worth NGN 83.26bn were placed, setting the bid to cover ratio at 2.38.

The auction showed that yields on Nigeria’s government debt are continuing to rise amid persisting worries about the U.S. Federal Reserve cutting back its economic stimulus, which have resulted in falling bond prices and rising yields, prompting some investors to pull out of high-yielding emerging market bonds.

Through its monthly government bond sales, the DMO aims to strengthen the domestic bond market, create a benchmark for corporate and municipal issuance and fund the federal government’s budget deficit.

Foreign investors’ interest in Nigeria’s bond market has increased significantly since the country was included in JP Morgan’s benchmark Emerging Markets Government Bond Index on Oct 1, 2012. Barclays also added Nigerian central government debt to its index in March 2013.

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