Nigeria sells $400m in 10-year bonds

The Federal Government has sold N65bn ($409.45m) in 10-year sovereign bonds at yields 150 basis points lower than its previous auction in October, the Debt Management Office has said.The debt office in a public notice on Thursday said it sold N35bn of 10-year papers due to mature in 2018 and N30bn in the 10-year papers maturing in 2019, at its eleventh monthly debt auction of the year. It pointed out that all the papers were reopening of previous issues.The debt office said, "The 10-year papers were all sold at a 16.50 per cent marginal rate. The 10-year paper attracted 18 per cent marginal rate at the last months auction, reflecting the hike in Central Bank of Nigerias benchmark interest rate but rates have come down to reflect greater liquidity in the market. Market is coming back in terms of pricing as increased liquidity in the system helped boost interest in the papers."The CBN had raised its benchmark rate by 275 basis points to 12 per cent and hiked cash reserves requirement to eight per cent from four per cent in a move to tighten liquidity and help curtail demand for foreign exchange.According to dealers, the hike led to rapid increase in yields across the board on fixed income assets, but pricing is gradually reversing to reflect greater liquidity in the market from budget disbursal to the three tiers of government.Meanwhile, total subscription at Thursdays auction was N157.72bn, reflecting the prevailing liquidity in the system.The DMO pointed out that the original coupon rates of 10.70 per cent for the 10-year offers would be maintained.The DMO had earlier said it planned to sell N65bn in 10-year sovereign bonds with different maturity dates on November 16.The debt office in a notice had said it would sell N35bn of 10-year paper due to mature in 2018 and N30bn in the 10-year paper maturing in 2019 at its eleventh monthly debt auction this year.The notice read, "All are reopening of previous issues and the results of the auction will be published the following day. The 2018 instrument has a term to maturity of six and half years, while the 2019 has a term of seven years, eleven months."When contacted, the Head, Corporate Affairs, Union Bank, Mr. Francis Barde, said, "SEC has told us to provide details on how the proceeds of the 2005 public offer was spent. They said the proceeds were not properly accounted for. We are working on the statistics; we will send them to them soon."
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