Nigeria’s 10-Year Bond Attracts 20% Interest Rate at DMO Auction

FG To Issue Green Bond To Fund 2023 Budget

Details from the auction results showed that the debt management office’s most recent main market auction on Monday saw buyers purchase Nigeria’s 10-year bond for 20%. Concerns about inflation have kept rates high for a variety of fixed-term assets.

The statistics office reports that the rate of inflation increased in March more quickly than anticipated, hitting 33.20% year over year and exceeding forecasts from investment banks and Bloomberg for the same month. Given the high market prices for products and services as well as the decreased output of agriculture, analysts predicted that prices will rise.

In Nigeria, price pressures persisted as the NBS’s March CPI report showed that the headline reading increased by 150bps to 33.2%. The food basket was the source of most of the pressure, which increased by 210bps, while the core index increased by 77bps, as per CardinalStone review.

At the bond auction on Monday, the DMO offered N450 billion across standard maturities. Investment firms reported that demand or total subscription was relatively healthy, with a bid-to-offer of 2.04x and a bid-to-cover of 1.47x.

The authority took advantage of the liquidity, allotting N626.82 billion, CardinalStone Securities analysts said in a note. 2029 FGN Bond was sold at 19.30%, 7-year bond was sold at 19.75% and 10-year bonds was priced at 20%.

The oversubscribed auction was supported by healthy liquidity and renewed appetite for naira assets on the hope that Nigeria’s economy will rebound after overhauling.

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