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Nigeria borrows N80 bln from domestic debt market at 5% interest

By on November 18, 2020 0 102 Views

By Oludare Mayowa

Nigeria borrowed a total of N80 billion from the domestic debt market on Wednesday with yields on the local debt marginally adjusted upward on the 15-year tenor and down on the 25-year paper.

The Debt Management Office (DMO) sold N40 billion worth of the 15-yea paper at 5 percent compared with 4.97 percent at the previous auction in October.

The debt office also sold N40 billion of the 25-year tenor paper at 5.78 percent, down from 6.0 percent at the previous auction.

READ ALSO: Nigeria’s equity rebounds with index up 1.7%, investors gain N300 bln

Total subscriptions at the auction stood at N184.74 billion with demand heavier on the 25-year debt, according to the details of the auction released by the debt office.

Investors were willing to buy up to N97.04 billion worth of the 25-year tenor paper and N87.70 billion of the 15-year paper.

Nigeria had proposed to raise a total N1.5 trillion from the domestic debt market this year to finance the gap in its revised N13.08 trillion 2020 budget.

Analysts said the DMO has been able to raise more than the amount projected for the year, but may have increased the band due to decline revenue from both oil and non-oil sectors this year.

Yields on short-dated Treasury bills have slipped below 1 percent level, pushing many investors to pile up investment in the local bourse.

The local equity market has gained 29.7 percent year-to-date, emerging the most performing equity market in the emerging market this year.

“Despite concerns around the macro-economic outcome in Nigeria, we estimate that robust system liquidity will most probably sustain demand for stocks for the rest of the year amid near-zero yield on Treasury bills,” analysts at United Capital projected.

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