- Revises Domestic Debt Issuance Calendar
Nigeria, through the Debt Management Office (DMO), sold a total of N142.75 billion worth of treasury bills at an auction on Wednesday where the issuer increased stop rate on the 3-month tenure paper.
The Central bank of Nigeria (CBN) on behalf of the Debt Management Office (DMO) raised N19.78 billion worth in 91-day bills at 2.50 percent, higher than 1.85 percent the similar tenor paper was sold at the previous auction.
The regulatory bank also raise N40.09 billion in the 6-month paper at 2.85 percent, compared with 2.49 percent it was sold previously.
A total of N82.88 billion worth of the 1-year paper at 3.84 percent, same yield attracted by a similar tenor debt instrument at the previous auction.
The debt instrument, however, was oversubscribed with investors demanding a total of N165.55 billion compared with N142.75 billion sold.
Demand was heavier on the longer tenor paper with investing asking for N102.03 billion worth of the debt compared with N82.88 billion sold.
“These stop rates are a pointer to the fact that the #FGN is desperately looking for money to fund budget deficit otherwise they would not have allotted more than amount offered,” Dayo Akinola, a financial consultant said.
“We would see more volume in bonds. next week. Expect high allotment to offer ratio.” said Ayodele Ebo, managing director Afrivest Securities.
Nigeria plans to raise N60 billion worth of bonds across three tenors at an auction on Wednesday as the country ramp up debt to plug gap in the 2020 budget.
Nigeria sells treasury bills fortnightly as part of measures to borrowing short-term funds from the public to finance government operations ahead of revenue collections.
Also, the CBN usually holds the treasury bills sales as part of its liquidity control measures, to curb pressure on the local currency.
Global Financial Digest reports that Nigeria plans to raise between N195 billion and N285 billion in domestic debt in the second quarter of the year, the Debt Management Office (DMO) said in a revised bond issuance calendar released late Wednesday.
The debt revision came on the heel of the federal government adjustment of its 2020 budget and Medium-Term Economic Plan (MTEP), which saw the budget deficit rising to around N5.36 trillion more than half of the reviewed N10.5 trillion proposed budget.
The federal executive council had approved a revised budget of N10.52 trillion for this year against the N10.59 trillion signed by the president in December last year due to the sharp drop in global oil prices and the impact of the Coronavirus pandemic on global economies.
The debt office increased the proposed debt issuance for June to N135 billion and N165 billion against the N15 billion and N45 billion initially proposed to be raised at the June auction.
The DMO had on Tuesday announced plans to raise N60 billion at an auction next Wednesday for the month of May, which conformed with the revised proposal.
Patience Oniha, the director-general of the debt office had on Saturday said as soon as the draft budget proposal for 2020 is approved by to accommodate the new borrowing plans, the debt office will adjust its quarterly debt calendar to reflect the new borrowing.
Nigeria plans to raise about N1.56 trillion in local debt instruments this year, while the balance will come from privatisation proceeds and concessionary borrowing from international financial institutions.