FG Resumes 2015 Borrowing N72bn at Higher Cost

Indeed year 2015 promises to be one of deficit financing as the Federal Government yesterday borrowed N70 billion through the sovereign bond window at a higher yield in a bid to attract investors in the face of dwindling economic fortunes.
The Debt Management Office (DMO) sold N72 billion of sovereign bonds at an auction on Wednesday, offering slightly higher yields on the debt notes to attract investors, the Debt Management Office (DMO) said on Thursday.
The debt office sold 28 billion naira in 2034-bond at 15.48 percent, compared with 15.49 percent at the previous auction last month and N20 billion in 2024-bond, at 15.43 percent against 15.2 percent at the previous auction.
A total of 24 billion naira in 2017-bond was sold at N15.2 percent, compared with 13 percent the note was last auctioned in June 2013.
Yields on Nigerian bonds have continued to rise at the secondary market as offshore investors exit the market on concerns on falling global oil price and depreciating local currency.
The central bank devalued the naira two months ago and in December tightened trading rules to try to curb speculation against the currency, slowing trading to a trickle. The naira had been hard hit by falling oil prices, cutting foreign income for Africa’s largest crude producer.
The devaluation of its target band by 8 percent to N160-N176 against the dollar was meant to halt the slide in foreign reserves, but the naira has traded well outside that band – and reserves are still falling.
All the debt notes are re-openings of previous issues.
The DMO said in a notice it received a total of N129.5 billion in subscriptions for the bonds but alloted N72 billion.

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