FG to borrow N430 billion of bonds in Q1

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Nigerian President Muhammadu Buhari

The Federal Government is planning to borrow between N340bn and N430bn of local currency bonds during the first quarter, the Debt Management Office has said.

In a data posted on its website on Friday, the DMO said that it would auction N110bn to N140bn worth of bonds maturing in 2021 and N85bn to N105bn in debt maturing in 2026.

It will also sell N45bn to N55bn in bonds maturing in 2027 and N100bn to N130bn of the 2036 debt.

According to the debt issuance calendar, the 2027 bond will be a new issue in March. The rest will re-open previously issued debts, starting after January 18.

The country has proposed a budget deficit of N2.36tn for this year, with the government hoping to fund it by borrowing N1.254tn domestically and N1.067tn from abroad.

The government struggled to fund the 2016 budget after a planned Eurobond sale and World Bank loan were delayed.

The Central Bank of Nigeria sold N172.85bn ($550m) at its first Treasury bill sale of the year on Wednesday, with yields unchanged from the previous auction held on December 21, 2016.

The CBN sold N115.85bn of one-year debt at a rate of 18.68 per cent, the same as the previous auction, the traders said.

They said the central bank also sold N35bn of 91-day paper at 14 per cent and N22bn of six-month bills at 17.5 per cent, unchanged from the previous auction.

Subscription at the auction came to N194.12bn, well up from N42.68bn at the previous auction.

The CBN issues Treasury bills regularly to help lenders manage their liquidity, curb rising inflation and provide naira to help the government fund its budget.

The central bank had on December 21 raised N39.72bn ($130.57m) at a Treasury bill sale, with yields unchanged on the previous auction.

It sold N13.17bn of three-month paper at 14 per cent, the same yield as on December 14, and sold N26.55bn of the six-month paper also at an unchanged 17.5 per cent.

The auction was sparsely subscribed with total demand of N42.68bn.

Meanwhile, the Kenyan shilling is expected to remain under pressure with the central bank likely to sell dollars to smooth out any volatility, according to traders.

Reuters reports that the Ugandan shilling is seen weaker, pressured by commercial banks picking up dollars in anticipation of a surge in demand from importers.

The Tanzanian shilling is expected to come under pressure in the coming days, weighed down by strong demand for greenbacks from the energy and manufacturing sectors.

The kwacha is likely to make marginal gains against the dollar next week as companies start preparing to pay taxes due on January 14.

Ghana’s cedi is seen steady next week amid expectations that the central bank will resume its fortnightly dollar sales to commercial banks, an analyst said.

The local unit declined by 11 per cent at the end of December compared to 18 per cent depreciation in the previous year.

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