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DMO Set To Raise N365bn Bond

Posted: Apr 7, 2016 at 3:00 am   /   by   /   comments (1)



The Debt Management Office (DMO) said on Monday that it plans to raise between N274 billion ($1.4 billion) and N365 billion in local currency-denominated bonds with maturities ranging between five and 20 years in the second quarter of 2016.


The debt office said it would auction between N15 billion and N25 billion in five-year paper in April, along with N35 billion to N45 billion worth in 10-year debt and N45 billion to N55 billion in 20-year bonds.


In May, the debt office plans to issue between N10 billion and N20 billion worth of five-year paper, N35 billion to N45 billion of 10-year bonds and N45 billion to N55 billion of 20-year debt.


In its latest bond issuance calendar, DMO also said it would in June raise between N10 and N20 billion in five-year, N35 billion to N45 billion in 10-year and N45 billion to N55 billion worth of 20-year paper.


The debt office said all were re-openings of those previously issued. Nigeria issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund its budget deficit. The Federal Government had hinted that it would borrow about N900 billion locally to finance part of the N2.2 trillion deficits in 2016 budget.


Meanwhile, Nigeria’s overnight interbank lending rates fell by more than half on Friday to around 5 percent from last week’s 13 percent after the Central Bank of Nigeria injected fresh liquidity into the financial system.


The apex bank retired about N179 billion ($900.40 million) in matured treasury bills through open market operations (OMO) on Thursday.


On Wednesday the bank refunded about N500 billion in unused balance of cash deposited by commercial lenders for forex purchases, swelling liquidity in the market and forcing down cost of borrowing among banks.


But overnight placement rose sharply last week to around 20 percent after the central bank recalled some 400 billion naira from the banking system to meet a new cash reserves ratio (CRR) on deposits.


The market closed at 13 percent a fortnight ago after cash payments from international oil companies operating in Africa’s largest crude producer under a joint venture agreement hit the system.


The CBN had raised its benchmark interest rate from 11 to 12 percent a fortnight ago, and the cash reserve ratio for commercial banks to 22.5 percent from 20 percent, to try to curb inflationary growth, leading to fears of higher interest rates.


The total commercial lenders’ credit balance with the central bank rose to 564.35 billion naira, up from 320.9 billion naira last week Thursday, traders said.


Traders said the central bank floated 50 billion naira in 209- day OMO bills on Friday, but was yet to release the auction results.