DMO auctions N21bn in bonds, as yields rise

The Debt Management Office at the auction on  Wednesday  sold N21.05bn ($131.56m) worth of bonds with maturities ranging from five years to 20 years and all with higher yields at a Data from the DMO showed that all notes were re-opening of previously issued bonds, and the DMO sold only a quarter of the amount initially offered.

The debt office sold N2.01bn in the bond maturing in 2030, against N35bn initially planned; N18.8bn in the note maturing in 2017, less than the N25bn initially offered; and N24m in the debt note maturing in 2015, against N25bn advertised for offer.

The debt notes were sold at higher yields with the 2030 maturing paper attracted 13.5 per cent, compared with 12.79 per cent at the previous month's auction; the 2017 paper attracted 13 per cent, compared with 12.25 per cent; while the 2015 attracted 12.25 per cent, against 11.6 per cent.

Dealers said the debt office cut back on the amount on offer because Nigerian bonds were less attractive since prices fell in last week's sell off by foreign investors.

Reuters quoted a dealer as saying, 'Investors were asking for higher yield in tandem with the going yield at the secondary market, but the debt office was not willing to go beyond certain level.'

Yields on local debt rose over the last two weeks as some local and offshore investors sold their holdings to book profit.

The naira weakened last week against the dollar, extending its worst weekly performance in a year, amid speculation the state-owned oil company sold limited foreign-exchange to the market.

According to London-based emerging markets strategist at Standard Bank Group Limited, Mr. Samir Gadio, the currency fell for a fourth day as dollar sales from Nigerian National Petroleum Corporation were less than expected.

Gadio said, 'The naira weakened amid less significant than expected NNPC flows, weaker confidence and limited capital inflows. It is likely that the Central Bank of Nigeria will intervene in the market in the near term and sell dollars directly to the banks to defend its nominal monetary policy anchor.'