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Nigeria to raise N225 bln on domestic debt market today amid expectations of higher yield

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By Samuel Bankole

Nigeria will sell a total of N225 billion in bonds on the domestic debt market today, Monday, across four tenors, according to the  Debt Management Office (DMO).

This will be the year’s first debt auction, with the debt office hoping to raise N90 billion apiece from the sale of bonds maturing in February 2028, April 2032, April 2037, and April 2049.

Analysts anticipate higher rates for fixed-income assets as a result of the recent increase in the Central Bank of Nigeria’s (CBN) benchmark interest rate.

In order to combat inflation, the CBN raised its Monetary Policy Rate (MPR) by 100 basis points to 17.5 percent at its last Monetary Policy Committee Meeting (MPC).

READ ALSO: NARD claims 2,000 medical doctors left Nigeria for greener pastures abroad in 2-year

The increase in the benchmark rate is expected to benefit fixed income returns, beginning with the domestic debt market and barring any impact of excess liquidity in the system.

Furthermore, as yields rise, more investors will flood the debt market to take positions.

Nigeria issues bonds on a monthly basis as part of the government’s efforts to raise funds to close a budget gap, set benchmark rates for corporate bonds, and assist commercial lenders in managing their liquidity.

The outcome of today’s auction may influence the direction of stock market transactions, as investors may be drawn to money market instruments rather than the capital market due to higher yields.

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