Yields fall across board at debt auction as DMO sells N178.5 bln bonds

Nigeria sold a total of N178.52 billion worth of bonds at its auction on Wednesday, more than the N130 billion initially proposed while yields fell across the board at the auction compared with the previous month’s auction, details of the bond sales published by the Debt Management Office (DMO) shown.
The debt office sold N75 billion worth in the 25-year bond new issue at 9.8 percent returns, against N130.27 billion subscriptions by investors.
A total of N36.52 billion worth of the 30-year paper was sold at the auction, with the debt office alloted N35 billion at the auction and N1.52 billion on non-competitive bids. Yields on the longest tenor paper fell 2.2 percentage points to 9.95 percent at the auction.
Also, the debt office sold N42 billion of the 15-year debt at 9.5 percent, down from 11 percent the same tenor paper was sold at the previous auction, while it sold N25 billion worth of the 10-year bonds at six percent rate.
Investors piled a total of N470.13 billion worth in subscriptions, indicative of the level of liquidity in the market.
Analysts said with the volume of liquidity in the market, which had forced down interbank lending rates, the strong demand at the auction was not unexpected.
Nigeria has projected to raise around N1.5 trillion from the domestic debt market to finance the gap in the revised 2020 budget of N10.81 trillion.
The increased appetite for domestic debt is triggered by the lack of varieties of channels for other investments despite to falling yields in the debt market.
Yields on the Treasury bill has also fallen below 5 percent in recent time as the government move to cut borrowing costs from both external and domestic debt markets.