Nigerian Bond Sale misses Target, Investors Seek Higher Yields

In yet another worrying sign for the government, which is already facing a funding crisis due to the decline in oil revenues, Nigeria raised N44 billion ($221 mln) at the bond auction on Wednesday, short of its target amount of N70 billion, the Debt Management Office (DMO) said on Thursday.
“For them to sell more bonds, the DMO would have had to increase its stop rate (yield ceiling), which it did not want to do,” one trader said.
The naira has hit a series of record lows on the parallel market after the central bank three weeks ago curbed access to hard currency on the official interbank market for importers of a wide range of goods.
Total subscription stood at N119.53 billion, the DMO said, down from 130.85 billion last month.
A total of N28 billion was sold in 5-year bonds at 15.28 percent, from 14.42 percent at the last auction in June.
The 20-year bond was issued at 15.29 percent to fetch N16 billion, compared with 14.24 percent last month.
Investors asked for yields as high as 16.745 percent for the 5-year paper and as much as 17 percent for the 20-year bond, the debt office said.
Nigerian inflation rose by 0.2 percentage points to 9.2 percent in June, its highest since February 2013, and above the central bank’s targeted upper limit, after disruptions to fuel distribution affected food prices.

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