Nigeria raised NGN45bn ($226.1mn) through the sale of two fixed-rate federal government bond issues (FGN bonds) at its latest regular monthly auction held on September 16, below its target of NGN70bn despite ample demand, data from the country’s Debt Management Office (DMO) showed. The office obviously rejected most of the bids in order to avoid paying huge yields, as the rates asked by investors reached as much as 20%.

Nigeria’s financial markets, the second most developed in sub-Saharan Africa after South Africa, have been disturbed by the authorities’ efforts to maintain the value of the local naira currency amid the global oil price slump, imposing a number of restrictions on the foreign exchange market. This, in combination with lower oil prices, which curbed the country’s export earnings and government revenue, has scared a number of foreign investors away. President Muhammadu Buhari’s sluggishness to appoint a cabinet and deliver a clear economic strategy has not helped either.

The latest blow to Nigeria’s capital markets came last week, when JP Morgan threw out the country from its widely followed Government Bond Index-Emerging Markets (GBI-EM), citing the lack of a fully functional two-way FX market and limited transparency.

DMO had offered NGN40bn of the 5-year issue, which bears a coupon of 15.54% and matures in February 2020, but sold only NGN20bn at a yield of 15.95%, up 56bp from last month.

The office sold also NGN25bn worth of 20-year bonds, which carry a coupon of 12.1493% and mature in July 2034, below a target of NGN30bn. The average yield climbed by 77bp to 15.97%.

Total demand at the auction reached NGN121.21bn, down 21% from last month.