Borrowing costs plunged to the lowest in 10 months in the first bond auction since dropping requirements for investors to hold government debt for at least a year.
The nation sold 70 billion naira ($460 million) of bonds due 2014, 2015 and 2018 Wednesday, the Debt Management Office said in a statement published yesterday. Yields on the 4 per cent debt due 2015 tumbled to 10.7 per cent, from 12.75 per cent at the last monthly auction, the lowest since a sale in September.
Bond yields in the secondary market have been falling after central bank Governor Lamido Sanusi said on June 23 Nigeria would lift bondholder restrictions. Sanusi is opening Nigeria’s debt markets to attract more capital and prevent a weakening of the nation’s currency, pushing up inflation and damaging economic growth, he said in March.
“There is a lot of bullish sentiment in the market,” Alan Cameron, an economist at CSL Stockbrokers Ltd. in London, told Reuters in a phone interview yesterday. “Yields are coming in partially because of the rules and partially because of inflation.”
Yields on the 10.5 per cent notes due 2014 declined to 10.2499 per cent at the auction yesterday, the lowest since the notes’ March issue, and down from 11.69 per cent at last month’s sale. The DMO sold 25 billion naira of 10.7 per cent bonds due 2018, yielding 11.5 per cent.