DMO Issues More Bonds as Inflation Falls

By Modupe Gbadeyanka

The Debt Management Office (DMO) said it had issued more bonds than originally planned at an auction after slowing inflation rate helped it offer debt at lower yields.

The DMO said it raised N160 billion at an auction last Wednesday, N30 billion more than it had offered to sell. Nigeria’s inflation slowed to 17.78 percent in February, its lowest level in 15 months.

The government has been selling bonds below inflation in recent months to curb borrowing costs as it intends to fund half of this year’s forecast budget deficit of N2.36 trillion through the domestic debt market.

An N80 billion bond due 2036 was sold at 16.28 percent against 16.77 percent at its last sale, while a 2021 debt was issued at 16.24 percent against 16.55 percent previously to fetch N30 billion. Another N50 billion due in 2027 was issued at par at 16.28 per cent. Total demand at the auction stood at N216.38 billion compared with N337.03 billion at last month’s sale.

Nigeria issues domestic bonds every month to raise money to fund its deficit, which also helps the banking system manage its liquidity.