Investors disappointed as Nigeria raises less than expected at bond, Treasury auctions
* Investors stake N634 bln
* DMO sells only N112.6 bln
* Yields fall across board
Investors staked a total of N634.10 billion on Nigeria’s debt instruments at two separate auctions on Wednesday, but disappointingly, the Debt Management Office (DMO) was only able to accept just N112.61 billion out of the huge demand.
Results of the bond auction and primary Treasury bill auctions conducted by the DMO on Wednesday was in sharp contrast to the expectations of market analysts, who had projected higher take by the debt office from the anticipated huge demand for the local debt.
Yields on the two auctions also decelerate across the board with the 3-month Treasury bills now trading at 1.8 percent against 2.0 percent previously while the 5-year paper at the bond auction fell to 8 percent from 9.20 percent previously.
Fixed income traders said the debt office bought less than the anticipated volume because it does not want to pay higher interest of the debt and that it has almost surpassed its target for the first half of the year from the previous auctions.
The government has in April approved to borrow ₦1.59 trillion from the domestic debt market this year to partly finance this year’s budget. The debt was made up of ₦744.99 billion from the domestic market and the initial ₦850 billion proposed to be borrowed from external sources but later converted to domestic borrowing due to unfavourable market conditions.
At Wednesday’s auction, the debt office sold N50.79 billion worth of the 30-year paper at 12.15 percent against 12.50 percent previously, N16.22 billion of the 15-year bond at 11 percent compared with 11.70 percent and N32.99 billion at 8 percent down from 9.20 percent.
Also, at the Primary Market auction for Treasury bills, the debt office sold N10.61 billion worth of the 1-year paper at 12.15 percent compared with 12.50 percent previously, N16.22 percent of the 6-month bill at 11 percent against 11.70 percent while it sold N32.99 billion of the 3-month paper at 8 percent at 9.20 percent returns.#GFD