Bad outing for bonds as investors shun auctions

The Debt Management Office (DMO) says it raised N56.05 billion in a bond auction on Wednesday, which is less than half of the amount offered.

The DMO had offered N135 billion worth of bonds maturing in 2021, 2027 and 2037 at interest rates of 16.8%, 16.8% and 16.9% respectively.

At Wednesday’s auction, the debt office sold N9.18 billion worth maturing in five years, N17.51 billion maturing in 10 years and N29.36 billion maturing in 20 years.

At the July auction, the debt office sold N3.90 billion maturing in five years, N47.01 billion maturing in 10 years and N55.05 billion maturing in 20 years making a total of N105.96 billion out of the N135 billion offered.

In February, the federal government had offered a $500 million Eurobond which was over-subscribed by almost eight times.

Abraham Nwankwo, DMO director general at that time, had attributed it to bolstering confidence in the quality of Nigeria’s cash flows and government.

“Nigeria is delighted to have successfully priced its third Eurobond issue. We have successfully extended the tenor of our borrowing programme in the international capital markets to 15 years, at a price that reflects belief in the quality of Nigeria’s cash flows and government,” he had said.

The bonds are part of the government’s plan to cover more than half of a N2.36 trillion naira deficit in the 2017 budget, which is expected to bring the economy out of a recession.