BUSINESS
FG to raise N130.3bn through Treasury bill next week
The Federal Government of Nigeria has concluded all plans to raise a total sum of N130.37 billion worth of treasury bills at an auction on October 4 (Wednesday), 2017, the Central Bank of Nigeria (CBN) has disclosed.
The central bank plans to offer 28.69 billion naira in three-month paper, 33.49 billion naira in six-month bill and 68.18 billion naira in one-year note. Results of the auction will be announced on the same day.
Also, the federal government hopes to issue a $2.5 billion Eurobond by mid-November, the head of the country’s debt agency saidon Thursday, the latest in a series of debt sales as it seeks to fund a record budget for 2017.
That 7.44 trillion-naira ($24.36 billion) budget is meant to fuel Nigeria’s growth after the economy pulled out of its first downturn in a quarter of a century in the second quarter of 2017. The planned mid-November issue would complement the $1.5 billion raised in Eurobond sales in February and March.
Nigeria now has a treasury bill portfolio worth 3.7 trillion naira, Patience Oniha, the director-general of the Debt Management Office, also said at a conference in Lagos. Nigeria’s 2017 budget is still being debated by policymakers, despite being signed into law in June.
Earlier this week, the upper house of parliament said it would invite the ministers of finance and the budget to speak on “inadequate releases” in the budget and “the need to expedite releases in order to stimulate the economy.”
But the Africa’s largest economy raised 243.7 billion naira at a bond auction on Wednesday, almost double the amount it had initially sought, as local funds and foreign investors piled into longer-term debt to lock in higher returns, traders said.
Nigeria’s borrowing costs have fallen from as high as 18 percent a few months ago as inflation has slowed, helping the government raise money to cover a gap in its budget. The Debt Management Office (DMO) had offered 135 billion naira worth of bonds maturing in 2021, 2027 and 2037, on offer. However, total investor demand stood at 394.8 billion naira, prompting the debt office to increase the size of the offer.
The DMO paid 15.98 percent for the 2021 bond, 15.90 percent for the 2027 issue and 15.92 percent for the 2037 debt. Consequently, the apex bank has said loosening its policy now would worsen inflation and drive bond yields into negative territory, which could lead to capital flight and hurt the currency. It kept its main interest rate on hold at 14 percent on Tuesday.
The country plans to borrow both locally and from offshore sources to help fund its budget deficit, which has widened due to lower oil prices slashing government revenues and weakening the naira currency.
Earlier, the debt office said Nigeria’s debut 100 billion naira sovereign sukuk issue launched last week was more than 5.8 percent oversubscribed, suggesting it may tap this demand more to help narrow the budget gap. The FG through its central bank isues treasury bills twice a month to help the government to finance its budget deficit, curb money supply growth and provide an avenue for lenders to manage liquidity.
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