The Debt Management Office (DMO) priced its 3-year government bond at 12.14 percent at Wednesday’s auction, up 102 basis points from the previous sale, to attract foreign investors unnerved by falling oil prices and a weakening naira.
The Debt Management Office said on Friday that yields on its longer-term 10-year and 20-year government bonds were priced for sale at more than 30 basis points higher than at its last debt auction, in September.
The foreign investors who are significant buyers of Nigerian debt were not rolling over bonds at maturity, analysts said. Instead, they were sending their money abroad to safe havens as interest rates in the United States begin to normalise.
According to Reuters, demand for government notes from Africa’s biggest economy dropped to N116.31 billion from N174.01 billion in September.
“There was some buying interest as the market sold off yesterday. Some domestic investors took advantage to take position,” one dealer told Reuters.
At the secondary market, yield on the 3-year most liquid bond rose 7 basis points to 12.81 percent. The 10-year stood at 12.91 percent, up 14 basis point.
Financial markets in Nigeria have been under pressure as foreign investors exit naira assets because of declining global oil prices and a weaker local currency, which has lost 3.7 percent since the beginning of the year.
The naira closed at 165.35 to the U.S. dollar, its weakest in at least eight months, as investors rushed to repatriate money to safe havens, dealers said.
The debt office raised 30 billion naira in 10-year debt at 12.79 per cent, up 57 basis points. The 20-year paper fetched 12.69 percent to raise 25 billion naira, up 31 basis point from September’s auction.
It raised N18.6 billion in 3-year debt.
The debt office sold an additional 10.33 billion naira in 10-year bonds on a non-competitive basis at 14.20 per cent, it said.