Nigeria sold 10 and 20-year bonds denominated in the local currency at 16.25 percent, the same as the inflation rate, at an auction on Wednesday, auction data showed on Thursday.
Nigeria’s annual inflation eased for the fourth straight month in May to 16.25 percent from 17.24 percent in April, while analysts expect the consumer price index to have declined further in June.
However, the Debt Management Office (DMO) sold less of the five-year bond at the auction than it initially offered as the yields on offer failed to attract investors seeking higher returns on the debt, auction data showed.
Nigeria’s debt office sold a total of 105.96 billion naira worth of five, 10 and 20-year bonds at the auction. The amount raised was less than the 135 billion naira it had initially proposed to issue at the auction.
A total of 47.01 billion naira of the 10-year paper was raised at 16.25 percent against 16.19 percent previously, while 55.05 billion naira worth of the 20-year bond was sold at 16.25 percent, compared with 16.19 percent previously.
It sold 3.90 billion naira worth of the five year debt at 16.24 percent compared with 16.19 percent at last month’s auction. The amount raised was short of the 35 billion naira initially offered by the DMO.
“The low demand for the 2021 bond was a reflection of the level of liquidity in the market and the pricing of the bond which was lower than the prevailing rate at the secondary market,” a senior fixed income dealer told Reuters.
The dealer said that while the 2021 paper was trading around 16.30 percent at the secondary market, the debt office sold it at 16.24 percent, which investors considered unattractive to them.
The debt office however sold more of the 2037 paper at the auction.
