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Nigeria plans to sell N630-N720 bln bonds in Q4 to plug budget deficits

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By Samuel Bankole 

Nigeria plans to raise between N630 billion and N720 billion in the last quarter of the year as part of measures to glug the gap in this year’s fiscal expenditures.

The latest notice from the Debt Management Office (DMO) showed that the government plans to sell domestic bonds across three tenor debt instruments in the three months to December 2022.

The fourth quarter’s debt issuance calendar showed that the debt office will sell on behalf of the federal government between N70 and N80 apiece in the bonds maturing in 2029, 2032 and 2037 in October to raise between N210 and N240 billion from the domestic debt market.

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Also, the debt office is expected to sell N70 and N80 billion apiece in 2029, 2032 and 2037 bonds in November and also in December to raise cash to finance the budget deficits in the 2022 budget.

All the bonds on offer are re-opening of previously issued debt paper, which now has shorter than the face value maturities across the three tenors.

The DMO usually sell domestic bonds on monthly basis to raise cash to back government expenditures, set the benchmark for corporate debt and help lenders to manage their liquidity.

Analysts anticipate that the interest rate on the debt instrument would increase at the next auction due to the Tuesday benchmark rate hike by the Central Bank of Nigeria (CBN).

They are, however, pessimistic about demand at the auction as a result of the move by the central bank to mop up liquidity from the banking system as part of measures to curb inflation and reduce pressure on the local currency.

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