Yields on Nigeria’s local-currency bonds rise at auction – Reuters

LAGOS, June 16 (Reuters) – Yields on Nigeria’s naira-denominated bonds rose across the board at an auction on Wednesday, where about 112 billion naira ($563 million) worth of paper maturing in 2036, 2026 and 2020 was sold, the Debt Management Office (DMO) said on Thursday.

The office said it had sold 50 billion naira of 2036 paper at 14.98 percent at Wednesday’s auction, compared with 13.90 percent at the previous auction last month.

It also sold 40 billion naira of 2026 debt at 14.40 percent, against 13.74 percent, and 22 billion naira of the 2020 debt at 14.20 percent against 13.24 percent.

Dealers said the yields reflected a rise in inflation, which hit a six-year high of 15.58 percent in May.

“Many investors were pushing for higher yields at the auction to reflect the higher inflation figure released recently, which was above the prevailing interest rate in the market,” one trader said.

Investors’ bids had demanded yields ranging between 10 and 17 percent for all the debt on offer.

Subscriptions from investors stood at 171.87 billion naira compared with 159.60 billion naira at the last auction.

Africa’s biggest economy issues local bonds as part of measures to finance the government budget deficit and also help to manage liquidity in the banking system.

Nigeria said it would borrow about 900 billion naira locally to finance part of the 2.2 trillion naira deficit foreseen in its 2016 budget.

(Reporting by Oludare Mayowa; Editing by Kevin Liffey)